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.