Wild in Dhaka, sleepy in Sofia

Continuing our series on investment opportunities in the world's emerging markets, Liam Robb looks at four more countries and considers whether they are likely to deliver good returns to shrewd speculators

Bangladesh

Worth a brief mention, if only because a change of government half-way through the year led to a domestic stock-buying frenzy which saw queues of 20,000 eager investors outside the Dhaka Stock Exchange and helped the 200 or so listed stocks rise a staggering 285 per cent. In sterling terms, has been the world's best-performing stock-market over the past 12 months.

The market, however, is very illiquid and many companies are trading on price-to-earnings ratios as high as 90, making stocks both expensive and potentially overdue for a correction. Per capita gross national product (GNP) is only $265 (pounds 170) per annum for 's 120m population. However, economic fundamentals are sound, with the growth rate steady at 5 per cent and inflation under control.

Textiles form the most important sector, and accounts for 80 per cent of the world's jute-fibre exports. Oil and gas reserves sufficient to last for the next 200 years should ensure the country's future economic health.

Belgium

Belgium's debt, which costs 10 per cent of public income per year to service, is one of the country's greatest worries and threatens its efforts to meet the convergence criteria necessary for European monetary union.

Many see membership as vital, not only because the majority of Belgian exports (which account for 70 per cent of GDP) go to neighbouring EMU- friendly states like Germany, France and the Netherlands, but because of the rift between the Flemish and French communities; a federalist split between the two is a serious possibility and EMU could provide the glue which keeps the opposing camps united.

While inflation, interest rates and exchange rates are all under control, unemployment at over l0 per cent remains a problem. However, the country is one of the world's most efficient producers of metal products and textiles, Flanders is a world leader in new hi-tech industries and Belgium's position at the heart of the single European market makes it a powerful magnet for foreign investment.

Recent stock-market issues like Belgacom, the telecoms company, and Sabena, the national airline, could not prevent the 325 stocks traded on the Brussels Stock Exchange returning only 4.2 per cent this year. Total market capitalisation amounts to pounds 67bn, with the largest quoted stocks including AT&T, Electrabel and Petrofina.

Credit Communal de Belgique, the bank which is allying with Credit Locale de France, has recently made a successful debut on the Brussels bourse and was oversubscribed by five times.

The flotation is only the second time a former state-owned company has achieved a listing, and this may be an important step in establishing a shareholder culture in Belgium. Indeed, the market's future may well rest with the banking sector; 147 banks cater for a population of l0m, and some corporate mergers are inevitable given the likely disappearance of the Belgian franc and the ensuing vulnerability to cross-border competition.

Brazil

The largest country in South America has this year produced one of the world's best-performing stock markets, with the 550 companies listed showing sterling returns of over 33 per cent. The performance is largely as a result of strong earnings growth in the telecommunications, oil and electricity sectors, which have driven the total market value up to pounds 68bn.

The country enjoys immense natural resources and is the world's largest producer of coffee and soya beans and one of the largest sugar and orange juice exporters. Introduced in 1994, Brazil's new currency, the Real, has been successful in controlling inflation, which in 1994 ran at 50 per cent a month; in September this year, inflation was zero and accumulated inflation for the year should be under 9 per cent.

However, widespread corruption and the "Brazil Cost" - a phrase used to describe the extra cost of production because of bureaucracy and poor infrastructure - remains a deterrent to foreign investment, and deregulation in the markets has not come as quickly as some might have hoped. Wealth disparity is also a concern: 32m Brazilians live below the poverty line and 80 per cent of farm land is owned by 10 per cent of farmers.

One of the most eagerly-awaited deals will be the Brazilian Government's sale of part of its stake in Companhia Vale do Rio Doce (CVRD), the mining giant and the largest iron-ore producer in the world. The company's value is put at around $12m (pounds 8bn) and the issue - which, barring any further political hiccups, comes to the market in March - could be one of the largest global offerings ever.

However, worries of an imminent interest-rate hike in Brazil mean that some brokers are steering clients away from rate-sensitive sectors such as the retailers and banks and, instead, utilities are in favour. Telebras, the telecoms company, should continue its recent run of form, and the market has recently received a boost with the Government's sale of 70 per cent of Cerj, Rio de Janeiro's state electricity distribution company.

Bulgaria

Known to most Britons as a place for low-budget skiing holidays, the Bulgarian economy is, quite simply, in a terrible mess.

Since its transition to democracy in 1990, the country has had one of the slowest privatisation programmes in Eastern Europe. The old Communist web of patronage is still intact and the 20 or so stocks listed in Sofia are avoided by both domestic investors (who convert any spare cash into US dollars or Deutschmarks) and by foreigners alike.

A typical day on the exchange might see only $500 (pounds 350) of stock traded. Inflation is 200 per cent and servicing debt payments alone costs over $1bn annually. To make matters worse, Bulgaria is owed $2bn - by Iraq.

The country's few strengths include coal and gas supplies and growing tourism. The Government has recently begun the closure of 67 loss-making state companies, and investor confidence may return to the market towards the end of 1997.

Until then, take heed of Parvoleta Shtereva, East European economist for ING Barings: "lf you decide to invest in Bulgarian stocks now you will not be buying at the bottom of the market," she says. "You will be committing suicide."

Performance statistics: Datastream. Banque IndoSuez runs a investment trust, listed in Dublin. Most European sector funds now have very small or zero weightings in Belgium. Numerous investment and unit trusts offer exposure to Latin America as a whole. Foreign & Colonial runs the Brazilian Smaller Companies investment trust.

Start your day with The Independent, sign up for daily news emails
Suggested Topics
Voices
voices
News
general electionThis quiz matches undecided voters with the best party for them
Arts and Entertainment
Keira Knightley and Matthew Macfadyen starred in the big screen adaptation of Austen's novel in 2005
tvStar says studios are forcing actors to get buff for period roles
News
Prince William and his wife Catherine, Duchess of Cambridge show their newly-born daughter, their second child, to the media outside the Lindo Wing at St Mary's Hospital in central London, on 2 May 2015.
news
Have you tried new the Independent Digital Edition apps?
Finacial products from our partners
Property search

Will your credit card rewards be scrapped following new EU rules on charges?

Providers are unhappy with new EU rules - but ultimately it is customers who will have to foot the bill
There remain more than a million unclaimed Premium Bond prizes worth collectively around £48m

Have you won £1m in the May Premium Bonds draw?

More than £60m was paid out to more than 2 million prizewinners this month

The 0 per cent introductory deals that credit cards offer are one of the most odious tricks

Beware credit card firms’ odious tricks

Why can’t we just have open and honest charges, without all the cross-subsiding?

The pound’s recent strength against the euro could be hit by economic uncertainty under a new government

How planning can make your travel cash go further

With the pound at a high against the euro, it pays to buy now before uncertainty post-election

Put the phone down on the coldcallers who see pension liberation as an opportunity to liberate your pension from you

Pension freedoms: How to deal with cold calls from scammers

Sean O'Grady offers advice on keeping your money safe
Switching to a better bank account is much easier than it used to be

More people are switching current accounts – but what do the figures mean?

Experts disagree about the 7% increase over the past year

The chance of getting what appears to be free money can be hugely attractive, especially to first-time buyers who can be fooled into thinking it’s extra cash to buy the essential new items they need for their dream home.

Beware the boom in cashback mortgage deals

Too many mortgages are being sold with misleading gimmicks

The firm’s revenues slumped by a third to £217 million in a disastrous 2014

Wonga results could get even worse this year, chief admits

The firm’s revenues slumped by a third to £217 million in 2014

The cost of a buildings policy has dropped by 10.1 per cent over the year, with the cost of a contents policy falling by 8.2 per cent

Simon Read: Mild winter cuts the cost of home insurance

The average quote for a buildings and contents policy has fallen by 3.6 per cent

Don't count your retirement money yet: employers will stop receiving a pension rebate next year and their staff may lose out

Defined-benefit pension schemes: Rebate change in 2016 may leave you out of pocket

Employees in defined-benefit schemes are held up as the lucky ones, but the state pension scheme will be overhauled in April 2016
Labour will raise the national minimum wage to more than £8 an hour by October 2019 (EPA)

Barclays new Blue Rewards hands cash to customers. What’s the catch?

Joining Barclays Blue Rewards costs £3 a month but then lets customers in for handouts of up to £15 a month

New research reveals that despite the recovering economy, four out of five low-income households have seen no sign of their financial situation improving

Hard-up families could be eligible for financial help

A charity is urging anyone struggling financially to see if they could get help from the state

When is the best time to buy foreign currency?

Video: With an election looming, a hung parliament could hit sterling

General Election 2015: Vote for the party that will boost your finances

Experts warn that the general election is unlikely to lead to stable markets. Simon Read talks to two investment managers who are advising caution

Make the most of your money in 2015-16: The end of the tax year is the beginning of the next...

The new tax year brings with it a raft of new rules and regulations
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Trainee Consultant - Surrey/ South West London

    £22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

    Ashdown Group: Trainee Consultant - Surrey / South West London

    £22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

    Recruitment Genius: Claims Administrator

    £16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

    Recruitment Genius: Senior SEO Executive

    £24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

    Day In a Page

    Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

    Fishing is on Nigel Farage's mind

    Ukip leader casts a line to the disaffected
    Who is bombing whom in the Middle East? It's amazing they don't all hit each other

    Who is bombing whom in the Middle East?

    Robert Fisk untangles the countries and factions
    China's influence on fashion: At the top of the game both creatively and commercially

    China's influence on fashion

    At the top of the game both creatively and commercially
    Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

    The man known as GOD has a reputation for getting the job done

    Lord O'Donnell's three principles of rule
    Rainbow shades: It's all bright on the night

    Rainbow shades

    It's all bright on the night
    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power
    Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

    The price to be paid for challenging the rule of extremists

    A revolution now 'consuming its own children'
    Welcome to the world of Megagames

    Welcome to the world of Megagames

    300 players take part in Watch the Skies! board game in London
    'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

    Charlotte Gainsbourg on 'Nymphomaniac'

    Starring in one of the most explicit films ever
    Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

    Robert Fisk in Abu Dhabi

    The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
    Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

    Vince Cable exclusive interview

    Charging fees for employment tribunals was 'a very bad move'
    Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

    Iwan Rheon is returning to his Welsh roots

    Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
    Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

    It's time for my close-up

    Meet the man who films great whites for a living
    Increasing numbers of homeless people in America keep their mobile phones on the streets

    Homeless people keep mobile phones

    A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before