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Bangladesh: where cricket really counts
Even die-hard fans of Manchester United or the New York Mets might be surprised to hear how seriously they take their sport in the town of Narail, Bangaldesh.
As Reuters reports, protesters in the home town of pace bowler Mashrafe Mortaza enforced a half-day general strike on Thursday following the former captain’s omission from the country’s final 15-man World Cup squad. Continue reading »
Bangladesh stocks: a rollercoaster ride
Whoever said emerging markets were no longer volatile? Shares in Bangladesh bounced back a dizzying 15 per cent on Tuesday after two days of losses so dramatic that the exchange temporarily shut itself down and protesting investors took to the streets.
Equity prices had tumbled nearly 8 per cent on Sunday and then close to 9 per cent on Monday, prompting talk of a bubble that was bursting. But the authorities moved to shore up confidence on Tuesday by easing rules to boost liquidity – and watched with pleasure as prices zoomed back up and erased almost all of the losses. Continue reading »
Guest post: bubble trouble in Bangladesh
By Ifty Islam of AT Capital
Regulators closed the Bangladesh stock market after only one hour of trading on Monday due to a second day of record share price declines, with the DGEN index falling more than 9 per cent.
This in turn led to angry demonstrations from retail investors in the streets of Dhaka demanding that the authorities address the market’s problems. But it is the unrealistic expectation that markets can be held above levels that are justified by fundamentals that is placing the Bangladesh authorities in an almost untenable situation. Continue reading »
11 for 2011: Will the Bangladesh bubble burst?
By Ifty Islam of AT Capital
Bangladesh remains a paradox among frontier markets: its GDP growth trend is one of the most stable in the region, but it has high levels of asset price volatility. It proved to be one of the economies least affected by the global financial crisis, with GDP growth only slowing from 6.3 per cent in 2008 to 5.9 per cent in 2009 as the country benefited from the so-called “Walmart Effect” of increased demand for cut price garments in recession-hit economies.
While this was a source of some comfort and relief to policymakers, it also helped to inflate an asset price bubble. Managing this may be the biggest macro challenge for the country in 2011. Continue reading »
Dhaka’s stock exchange: embers
The Dhaka Stock Exchange had a roaring rally for much of this year, rising more than 90 per cent at its peak, fuelled by easy liquidity and a flood of new investors, with little experience – or expectation – of an equity market’s volatility.
But now Bangladeshi regulators must try to deal with a seriously overvalued market – the market is currently trading at price-to-earnings ratios of around 26 to 27 – and investors with no tolerance for any downward correction. Continue reading »
The success of microfinance sometimes appears simply a matter of a brilliant idea (lending small amounts to unbanked entrepreneurs) and a charismatic leader (Muhammad Yunus, now a Nobel prize winner).
But microfinance’s future growth may depend on governments and big investors. So it’s significant that, according to a new report out today, Peru has the world’s best business and policy environment for microfinance. Bangladesh, home of the Grameen Bank, doesn’t even make the top 30. Continue reading »
Bangladesh splurges on IMF gold
Across South Asia, affluent families have long hoarded gold, viewed as the safest asset in turbulent times – and the right gift on an auspicious occasion. Brides are sent off to their grooms decked in gold jewellery that serves both as decoration, and a future safety net. Gold, people think, is more likely to hold its value than mere cash.
Now Bangladesh, one of the region’s poorest countries, has bought gold from the IMF, to hedge against currency volatility. Continue reading »
After China, Bangladesh wants higher wages
With Chinese labour costs rising fast, international clothing companies like H&M, Wal-Mart Marks & Spencer, Gap and Zara have looked to up their sourcing from other, lower cost producers like Bangladesh.
The country has the lowest labour costs in the world, with a minimum wage of just $25 per month, a fact that has helped exports to surge to around $12bn, up from just $5bn eight years ago. But much like Chinese workers of late, Bangladesh’s estimated 2m garment industry workers are becoming highly restive, and they have gained an unlikely supporter: the prime minister. Continue reading »
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