AFC Asia Frontier Fund allocates 18.1pc asset to Bangladesh market

FE Online Report | Published: January 12, 2018 11:42:45 | Updated: January 14, 2018 12:21:06


Asia Frontier Capital (AFC) allocated 18.1 per cent of its total allocated Asia Frontier Fund to the capital market of Bangladesh by the end of 2017.

The largest asset allocation of the fund went to Vietnam (28 per cent) and Pakistan (20.8 per cent) followed by Bangladesh.

Thus, Bangladesh became the third largest destination of this global investment management company in the frontier market in Asia. Asia Frontier Market includes: Bangladesh, Cambodia, Iraq, Laos, Maldives, Mongolia, Myanmar, Pakistan, Papua New, Guinea, Sri Lanka, and Vietnam.

The AFC Asia Frontier Fund invests in listed equities of companies that have their principal business activities in these countries.

To make the investment, the fund considered frontier countries that are ‘seeing increasing consumption due to favourable demographic trends, rising incomes and high GDP growth’.

As of December 31, 2017, the portfolio was invested in 114 companies and one fundm and it held 0.8 per cent in cash.

“The two biggest stock positions were a pharmaceutical company in Bangladesh (8.2 per cent) and a pump manufacturer from Vietnam (3.5 per cent),” said the latest newsletter of the AFC.

AFC is a fund management company based in Hong Kong that specialises in investing in high growth Asian frontier economies.

Frontier economies or markets are developing countries those are considered more developed than the Least Developing Countries (LDCs), but too small to be generally considered an emerging market.

The term was coined by International Finance Corporation’s Farida Khambata in 1992 and generally used to describe ‘the equity markets of the smaller and less accessible, but still investable countries’ of the developing world.

Different global investment consultancy and fund management companies prepared different lists of frontier markets mainly based on their investment and business interests.

“The AFC Frontier Universe offers attractive investment opportunities as their combined GDP is comparable in size to emerging and developed countries,” said another report of AFC.

According to the report, Gross Domestic Product (GDP) of Bangladesh is the second largest among the countries of the frontier markets after Pakistan.

 

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