Dawn Global launches ETF listed on NYSE

Bangladesh stock market can attract more foreign investment through easing concerns related to liquidity, potential regulatory involvement, enlistment of local companies, and providing more incentives, said Maurits Pot, Founder & CIO of Dawn Global Management.

In an exclusive interview with the FE, Mr Pot talked about Bangladesh stock market, its potentials and weaknesses, strengths of Bangladesh's economy to lure foreign investment utilising its unique window of demographic dividend and the country's stable growth trajectory.

Dawn Global, London and Jersey, recently launched the Asian Growth Cubs exchange traded fund (ETF) listed on the New York Stock Exchange (NYSE) focusing on public equities in five emerging and frontier growth markets including Bangladesh.

Cubs is the first active thematic ETF dedicated to emerging and frontier growth markets, focused specifically on five large, fast growing yet historically difficult to access markets spanning over 860m people - Bangladesh, Indonesia, Pakistan, Philippines, and Vietnam

Dawn Global is pioneering active thematic ETF investing in the next generation of growth markets through public companies that are leaders, enablers, and beneficiaries of growth markets trends

The company offers institutional investors, multifamily offices, investment and financial advisors long-term geographic and growth diversification accessed via public markets.

It focuses on growing companies that are leaders, enablers, and beneficiaries of emerging and frontier market growth trends.

Referring to the weaknesses of Bangladesh's stock market, Mr Pot said, historically, potential concerns surrounding the Bangladeshi stock market have included 1) liquidity concerns, 2) potential regulatory involvement concerns, 3) lacking incentives and onerous requirements for new domestic companies to be listed and 4) pipeline of companies listing locally.

"However, we (Dawn Global) commend the efforts of the government and the Bangladesh Securities and Exchange Commission (BSEC) in addressing these historical concerns and making the stock market a more welcoming and encouraging investment destination for foreign investors," he told the FE.

He said the first product of Dawn Global is the Asian Growth Cubs ETF, focused on five countries in South Asia: Bangladesh, Indonesia, Pakistan, Philippines, and Vietnam.

The ETF has an environmental, social, and governance (ESG) lens that excludes specific sectors based on ESG criteria while the current portfolio has a bias to the economy of tomorrow, through exposure to industries such as Healthcare, technology, media, and telecom (TMT), fast-moving consumer goods (FMCG), and financial institutions and fintechs.

He said, "We are attracted to Bangladesh for several socio-economic reasons and believe the Bangladesh opportunity is often overlooked or not well understood by foreign investors."

Specifically, the company is encouraged by the robust economic policymaking, a unique demography characterised by a young, dynamic and digitally enabled demographic dividend and a balanced economy that derives an increasing share of activity from the services sector, he added.

The Asian Growth Cubs ETF, covering the five countries, have a long-term historical growth track-record and strong IMF growth outlook, and have demographics characterised by a young, growing, digitally enabled population, he said.

The World Bank (WB) has recently projected Bangladesh's GDP growth to 5.1 per cent in 2021, amid concerns over the coronavirus pandemic.

Bangladesh's economy is showing nascent signs of recovery backed by a rebound in exports, strong remittance inflows, and the vaccination programme," according to a WB report in April.

However, Bangladesh government has set the GDP growth target to 7.2 per cent for the FY 2021-22.

Besides, Bangladesh has been in the unique window of demographic dividend as over 65 per cent of the country's population is of working age (15-64 years) which indicates the country's potential in future economic development, according to the United Nations Population Fund (UNFPA).

The Dawn Global CIO said, "We believe Bangladesh could still improve the ease of doing business for foreign investors but are encouraged by the direction of change and improvements."

"The BSEC has already made great progress is reforming the stock market - we would be encouraged if the BSEC is able to attract future dynamic, fast-growing, quality companies to list locally and thereby bolster the domestic capital markets," he added.

Detailing the plan about promoting the Cubs ETF, he said the product and supporting content including the website will promote and draw attention to the untapped growth opportunities in the region, including in Bangladesh.

"We plan to launch future content initiatives that will enhance the profile of Bangladesh specifically, such as through interviews, podcasts and features profiling some prominent initiatives, business leaders or rising opportunities in Bangladesh."

"I believe this ETF launch is an exciting and ground breaking development for Bangladesh - I am excited to be part of this development and hope this attracts further long-term investment to the country," he concluded.

Dawn Global is the sponsor to the fund and an appointed representative to KCPL. Foreside Fund Services LLC, a provider of investment management services, is the distributor of Cubs.

Mr Pot has been a public and private equity investment partner at Kingsway Capital, a leading emerging and frontier markets specialist with assets under management of more than US$ 2.0 billion, where he has represented investors on the boards of several emerging market companies.

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