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Did you know Bangladesh’s Dhaka Stock 
Exchange has more listed companies 
than emerging markets like Russia, 
Mexico or Egypt, or GCC markets like 
Saudi Arabia, UAE and Kuwait? It is 
at par with Brazil, another emerging 
market. Let us look specifically at the 
Top-200 listed companies by market cap. 
Large companies have better access to 
resources, technology and talent, and are 
better proxies for market performance. 
If one combines the Bloomberg data of 
the largest 200 companies as per market 
cap, did you know the average Return on 
Equity (ROE) in 2016 placed Bangladesh 
amongst the Top-8 in a sample of 27 
prominent emerging/frontier markets? 

Or did you know that more than 50% of 
its large companies delivered a positive 
growth in profits, in terms of 5-year 
CAGR from 2012 to 2016. It was one 
of the only 6 markets out of the sample 
of 27 that achieved this. Last, did you 
know it was one of the only 8 markets 
from this sample in which more than 90% 
companies were profitable in 2016? All 
these indicate its breadth and buoyancy 
in performance. But many globally would 
be unaware, hence only a dozen portfolio 
funds had over 90% allocation of their 
corpus to Bangladesh as of early-2017, 
while Indonesia and South Africa had 50 
each and Thailand and Turkey had close 
to 200 each.

But at the same time, data also helps 
quantify the areas for improvement. If one 
breaks-up ROE as per DuPont method, 
then the main accretion to Bangladesh’s 
ROE was due to leverage (average asset/
equity). Reaching optimal leverage is 
good to maximise growth, but Bangladesh 
was higher than the sample’s average. For 
company, it had Nigeria, Turkey, Morocco 
and China, apart from developed markets 
like UK, Canada, Germany and Israel. It 
ranked amongst the least in productivity 
(average revenue/assets), showing that 
the sweating of its assets is inadequate. 
For company, it again had Nigeria 
and Morocco, apart from all the GCC 
markets. Its South Asian neighbours like 

If one looks at profit 

concentration, the 

contribution of the 3 

largest sectors to the 

profit-pool of Top-200 

companies was 68% 

in Bangladesh in 2016. 

Most Asian peers were 

less concentrated. It was 
below 70% in Indonesia 

and below 60% in India 

and Thailand.

By: Sourajit Aiyer