Frontier markets: A second look at Bangladesh

Much has been written over the past few months about Bangladesh and none of it has been very complimentary. So I felt it was time again to revisit that country and see if any progress had been made on the economic front. Initially, I was pleased to read a report on the Asian Development Bank’s website indicating that the economic growth forecast for 2015 is 6.1% and 6.4% in 2016. Those indeed are very good numbers, considering that the main revenue-marketproducing element is the service sector and in particular the textile industry.

Recently, however, the telecommunications sector has grown dramatically, though it is dominated by foreign investors. Agriculture, of course continues to be a very important sector as Bangladesh occupies extremely fertile land with rice, jute, wheat, and cotton making up the main exports.

Bangladesh has a lot going for itself, but the fear of domestic terrorism remains just beneath the surface and does on occasion rear its ugly head, as played out recently by the gruesome murders staged at the hands of fundamentalists. As in Nigeria, bouts of terrorism such as these unnerve foreign investors, and the government would do well to prosecute the individuals responsible to the full extent of the law as its neighbor India has done recently.

The growth prospects remain bright in the long run and as an investor, I would definitely put this country on my watch list. As far as investing is concerned, the only Bangladesh focused ETF available is the db x-trackers MSCI Bangladesh Index ETF (XBAN) traded on the London Stock Exchange but available in the US. This ETF has a return of 2.35% YTD. With the volatility in the developing markets right now, I think it prudent for an investor to seek out larger markets such as India, and wait for a few months before purchasing any shares in this ETF.

By Peter Kohli

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.


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