As Bangladesh celebrates its 50th anniversary, we are comparing Asia’s most exciting long-term demographics stories with Vietnam who now has a higher trading turnover than Singapore. The state of the Bangladesh stock market is where Vietnam’s stock market was 5 years ago and seems ready to start closing this gap.
Bangladesh, being a quick learner, was one of the poorest countries when it became independent in 1971 and has shown 7% economic growth in 4 consecutive years till the pandemic. This report compares and contrasts the two countries on a number of different metrics to help investors better understand the region’s economic and social development story.
Bangladesh, with a larger economy and population, is growing at a tremendous speed with a similar trajectory to Vietnam, despite having power shortages, poor infrastructure, a banking sector struggling with soured loans, and political issues. Bangladesh also has a strong macroeconomic position and an external balance sheet, with minimal external debt and substantial FX reserve coverage.
In our opinion, Bangladesh is one of Asia’s most fascinating long-term demographic tales. Consumption is influenced by urbanization, smaller homes, and the presence of more women in the workforce. As incomes grow and technology plays a larger role in the economy, the country reaches the verge of an industrial revolution.
With a market capitalization to GDP ratio of only 14%, Bangladesh receives much less attention than it deserves. The market is small, illiquid, and difficult to reach, which was the same scenario in Vietnam five years ago. Until 2015, the two markets were comparable in size, but Vietnam has grown four times since then. Bangladesh, we believe, is ready to bridge the gap. It is less connected with global macro and equities themes than Vietnam, and analysts pay it significantly less attention, providing chances for fund managers seeking diversification and “hidden gems.”
This report was first published on 30th June, 2021.