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Chinese bourses to invest in Pakistan

Chinese bourses to invest in Pakistan

ISLAMABAD: A Chinese consortium led by three Chinese exchanges is slated to acquire a 40 percent stake in the Pakistan Stock Exchange (PSX) for Rs28 ($0.27) per share, valuing stake at Rs8.96 billion, Global Times, Beijing reported.

The three exchanges – China Financial Futures Exchange, Shanghai Stock Exchange and Shenzhen Stock Exchange – will take a combined 30 percent, while the remaining 10 percent will be halved between their local partners – Pak-China Investment Company and Habib Bank. This is the first time for a Chinese bourse to acquire shares of a foreign stock exchange.

The consortium will invest US$85 million, a source with close knowledge about the deal told China Daily.

Deng Ge, spokesman of the China Securities Regulatory Commission said earlier that CSRC supports the acquisition and hopes the deal is completed smoothly, with the prerequisite that the risks are controllable.

“This investment will help broadening economic and financial collaboration between China and Pakistan and will help implement the Belt and Road Initiative and China-Pakistan Economic Corridor,” the announcement of SSE said.

PSX expects that the investment will bring experience, technological assistance and new products, a PSX official said. For example, options trading and futures trading may be activated.The Karachi-based PSX is currently the only stock exchange in Pakistan which was created in January 2016 following the merger of Islamabad, Karachi and Lahore exchanges.

Back in January 2015, at start of corporatization, Pakistan decided that the exchanges would offer no higher than 40 percent of their shares to international investors, no less than 20 percent to the public and the remaining to qualified domestic financial institutions.PSX was included in the emerging market index of the Morgan Stanley Capital International in June last year.

“Pakistan’s market reform has been accelerating in recent years and the country has received backing from global institutions and overseas capital, making PSX more appealing to global investors than before,” Bao Kaijun, an analyst with Shanghai-based Kunyuan Investment Advising Services, said.

China’s financial market has been opening up and getting increasingly connected to global markets. The Shanghai-Hong Kong Stock connect and Shenzhen-Hong Kong Stock connect are key to this opening.