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A bright spot for investment

A Swiss fund manager explains why investors should park money in Bangladesh

Gazi Towhid Ahmed
***"When selecting an investment opportunity, the manager looks for well recognised brands with a
strong presence and competent management in a growing market"***
BANGLADESH has a huge potential for the foreign fund managers as the country’s economic growth and performance by listed companies is very good, said Roberto Pusterla, a Swiss fund manager.
This is the right time to invest in the Bangladesh stockmarket as the market is lucrative for long-term investments, said Pusterla, also a member of the management (private banking) of Geneva-based Banque Morval.
He emphasised the need for political stability, power and infrastructure development, and macro economy and foreign investor friendly policy to attract investors into the country.
"I hope Goldman Sachs, an international asset management firm based in USA, will come one day to invest in Bangladesh's stockmarket,” he added.
A Swiss fund invested 10 million euros (Tk 107.3 crore) in the Bangladesh stockmarket in October 2010 — the first foreign fund invested in the country.
The fund styled 'Bangladesh and EM Equity Fund' was created targeting Bangladesh and some other emerging markets.
“We are working to collect more capital from individuals and institutional investors globally," said Pusterla, fund manager of Bangladesh and
EM Equity Fund.
Pusterla said in the Bangladesh stockmarket, the fund's preferable sectors include banks, pharmaceuticals, power and telecom.
The fund invested 32.01 percent in the banking sector as on January 31, which is the fund's biggest investment in a single sector.
The fund invested 19.89 percent in the fuel and power sector, 13.03 percent in pharmaceuticals, 5.89 percent in telecommunication, 8.09 percent in tannery and textile, 1.55 percent in food and allied and 14.27 percent in others.
He said the fund's strategy is to identify undervalued listed companies and provide exposure to these companies through a diversified portfolio of equity holdings.
“When selecting an investment opportunity, the manager looks for well recognised brands with a strong presence and competent management in a growing market,” according to the fund's strategy.
Commenting on market behaviour and the macro economy of Bangladesh, Ales Glavan, an adviser to the fund manager for Bangladesh, said the present situation in the market is the entry point for long-term investment as the share prices of many of the fundamentally strong companies have come down.
"Bangladesh Bank doing very well in controlling inflation as the government cut subsidy in
different sectors. This policy will be helpful for the economy in the long run. A 6 percent to 6.5 percent GDP growth is helpful for the country,” Glavan said.
Foreign investors, including non-resident Bangladeshis in Europe and in other countries, have a good opportunity to invest in the fund, he said. “If they put cash in our fund, we can invest largely in Bangladesh.”
The government decided to withdraw the 10
percent tax on profits earned by foreign institutional and non-resident Bangladeshi investors, which will help foreign investment, he said.
He said administrative complexities, political instability and tax barriers are the main obstacles for the foreign investors.
Bangladesh and EM Equity Fund made its investment through BRAC EPL, one of the leading portfolio managers that give stock brokerage services to foreign fund managers.
The Swiss fund is not the only one to focus on in the Bangladesh market. Data on portfolio investment shows that foreign investors or global fund managers are also investing here.
Foreign investors bought shares worth Tk 1,216.83 crore, while they sold shares worth Tk 1,138.40 crore last year, according to Dhaka Stock Exchange (DSE) statistics.
The buying tendency by the foreign investors, most of whom are actually global fund managers, can be attributed to the lower value of securities due to massive corrections in share prices throughout the last couple of years, local brokers said.
The overall market PE (price to earnings) ratio came down to a five-year low at 13 last year, a level that points at a good time for investment, they said. The market price-to-eamings ratio on the Dhaka bourse was 11.61 yesterday.
gazitowhid@gmail.com