A number of global fund managers, including the New York-based world’s one of the leading financial management and advisory companies, Merrill Lynch, target their barrels towards Bangladesh, industry people have said.
Factors, including stable economic outlook, relatively calm in the political field and vast population have attracted some global top fund managers, they said.
“Global equity investors are looking for investment opportunities in Bangladesh,” said a fund manager at a top brokerage firms requesting not to be named.
He said stable economic growth over the last one decade and a vast group of young people who are potentials to keep contribution to the economy is behind the attraction.
Before putting funds on any company, they usually prefer long-term investment in the companies with good fundamentals and love to talk with the company management too, he said.
Chad Cleaver, fund manager at Luxembourg-based VAM Funds, said, “We believe the frontier markets provide an inefficient landscape.”
A frontier refers to a type of country that is not a developed market.
A day before yesterday, Cleaver told a news portal, Fund Selector Asia, the frontier markets offer the attraction of high rates of growth and return on the capital and they are still trading at a discount in both emerging and developed markets.
The company recently launched VAM Frontier Markets fund targeting countries that have a large population, favorable demographics, and are market share gainers or low cost producers.
“Two countries in Asia that fit these criteria, where we have sizable overweight positions, are Vietnam and Bangladesh.”
Bangladesh is well positioned as a textile producer, he said. The country is located near the large export markets like China and India. In addition, as China’s working age population peaks, a migration of its textile manufacturing business to Bangladesh is likely.
Bata Shoes Bangladesh is an example of the companies he sees benefiting. It has strong brand recognition and is shifting toward branded apparel.
It is well known that inadequate energy and transportation infrastructures, political infighting, bureaucracy, corruption and a shortage of skilled laborers contribute to a challenging investment climate in Bangladesh.
“Despite this, the country’s economy has managed to grow more than 6% a year for much of the last decade,” said Md Moniruzzaman, managing director of the IDLC Investments said.
It indicates that Bangladesh has a promising economic growth histology, which mainly catches the eyes of foreign fund managers, he said.
Moreover, local currency against greenback remained stable in recent period but in our neighbouring country India’s currency depreciated against it, he said, adding that political front is relatively calm after the national election.
“These might be the factors for attracting overseas investors.”
Earlier, the economists at Standard Chartered Bank believe that Bangladesh could join what have been called the “7% club” of economies that expand at least 7% annually for an extended period — allowing their economies to double every decade. The current members of the “club” include China, Cambodia, India, Mozambique and Uganda.
