News dalla rete ITA

8 Gennaio 2017

Pakistan

WITH PAKISTAN BOURSE INVESTMENT, CHINA TIGHTENS ECONOMIC GRIP

A Chinese consortium's pending investment in the Pakistan Stock Exchange looks to link the South Asian nation's economic fortunes even more closely to the continent's superpower -- a potential win for both sides as Beijing's pan-Asian development efforts advance. Three Chinese bourses -- the China Financial Futures Exchange, Shanghai Stock Exchange and Shenzhen Stock Exchange -- along with two financial institutions in Pakistan are set to take a 40% stake in Pakistan's only stock exchange, known as PSX. The consortium's bid totals around 9 billion Pakistani rupees ($85.8 million) at 28 rupees per share. Representatives of both sides, along with Pakistani Finance Minister Mohammad Ishaq Dar, will meet Jan. 20 to ink an official sale agreement, a PSX official said. The Chinese exchanges will directly hold a 30% interest in the Pakistani bourse after the sale, and could purchase more down the road, PSX Managing Director Nadeem Naqvi told Nikkei Asian Review in December. Currently, 200 Pakistani brokerages each holds a 0.5% stake in the exchange. That figure will drop to 0.3% apiece following the share sale. Eventually, all PSX shares could hit the market. In addition to the 40% being sold to the consortium, 20% of all shares are to be listed on the exchange in six months, Naqvi said. The remaining 40% can be sold at shareholders' discretion, he added. While the Chinese bourses' holdings must remain below 50% of the total for the next three years, regulators could allow investment above that level in the future, Naqvi said. PSX was formed in January 2016 from the merger of three existing exchanges in Karachi, Lahore and Islamabad. Even before the creation of the new stock exchange, the plan had been to sell a 40% stake in it to strategic investors who would help upgrade trading system technology and boost turnover. Pakistan's stock market remains rather small, with around 550 listed companies and total market capitalization a little over $80 billion, according to Naqvi. It has not been revealed how the Chinese exchanges will divvy up the PSX shares among themselves. But the trio will undoubtedly become the bourse's top shareholders. In return, the exchange will receive guidance on a system overhaul. Meanwhile, a potential stock-link system and the opportunity for companies in both nations to cross-list are expected to increase turnover on the Pakistani exchange. Given robust corporate earnings in the country, Naqvi predicts total market cap could, conservatively, hit $100 billion in two or three years. This is thought to be China's first investment in an existing stock exchange overseas. Chinese economic involvement in the South Asian nation has grown a good deal deeper of late. Work on the China-Pakistan Economic Corridor, or CPEC, a development zone stretching 3,000km, kicked into high gear in 2015. China is putting up the majority of the project's $46 billion cost -- an amount equal to nearly 20% of Pakistan's gross domestic product. Chinese companies involved in building CPEC infrastructure could soon cross-list on the PSX, while Chinese investors could begin trading on the bourse. If the partnership is judged a success, other countries in South and Central Asia could take note of the benefits that come from close ties to Beijing. Such an understanding could go far in laying the groundwork for China's ambitious "Belt and Road" initiative, a series of infrastructure projects aimed at creating new trade routes spanning from China to Europe. (ICE DUBAI)