Foreign firms which have made a name around the world through trading in stock markets see huge business potential in Bangladesh and are interested to establish their footprint in the country.
UK-based EFG Private Bank, Aberdeen Asset Management and BlackRock: Financial Planning & Investment Management, China-based CITIC CLSA Securities, and US-based Goldman Sachs Group have all expressed their interest in securing brokerage licences of the Dhaka Stock Exchange (DSE).
Of them, BlackRock is one of the world’s most renowned asset manager guiding individuals, financial professionals and institutions, while CITIC is the leading securities firm and largest underwriter of Chinese debt and equity.
Goldman Sachs is one of the leading global investment banking, securities and investment management firms, providing financial services to a diversified client base, including corporations, financial institutions, governments and individuals.
The companies have expressed the interest to come to Bangladesh when the bourse was in the process of signing an agreement with a Chinese consortium to make them a strategic partner, said KAM Majedur Rahman, managing director of the DSE.
“Their participation in the market will help increase foreign investment,” he said.
He said the DSE’s image would have to be broadened to become an emerging market from a frontier market and attract more foreign investment.
“To do so, we have to bring in more companies with good records and increase their free float.”
The CEO said the foreign firms were attracted to Bangladesh because of the country’s consistent higher growth rate and foresaw immense potential of the DSE because of its relatively low market capitalisation.
According to the DSE, the market capitalisation of the exchange is only 17 percent of the gross domestic product whereas it is more than 100 percent in Singapore and many other countries.
Since members are not allowed to sell or transfer their brokerage licences, the market regulator is in the process of formulating rules. However, nearly a year has elapsed but the regulator is yet to seek public opinion on the matter.
A top official of the Bangladesh Securities and Exchange Commission says the formulation of the rules is nearly complete and they will soon convene a meeting to make them public.
Abu Ahmed, a stock market analyst, said there were an excess number of local brokerage houses for which most were suffering losses and failing to attract depositors.
However, he thinks, foreign brokerage houses may bring positive impact for the market.
Currently, there are 250 brokerage houses in Bangladesh, facilitating stock trading. The DSE’s daily average turnover ranges from Tk 300 crore to Tk 400 crore.