A Chinese-led consortium that includes three Chinese exchanges and two Pakistani financial institutions, has signed a final deal to purchase a 40-percent stake in the Pakistan Stock Exchange. The bourse’s market capitalization from 558 listed companies is $77 billion.
The group includes China Financial Futures Exchange (CFFEX), Shanghai Stock Exchange (SSE), Shenzhen Stock Exchange (SZSE), Pak China Investment Company Limited and Habib Bank Limited.
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The three Chinese exchanges will take up 30% stake, through a deal valued at $85 million, while their Pakistani partners will pick up 5% each, the maximum permitted to a single institution under the regulations.
The Karachi-based Pakistan Stock Exchange (PSX), which was formed by consolidation of Karachi, Islamabad and Lahore stock exchanges, has been one of the best-performing markets in Asia in 2016, with its benchmark KSE 100-stock index gaining more than 40 percent this year.
Although the bourse offers trading in stocks, bonds and derivatives, in fact it’s almost entirely dependant on the ready cash market. There is no options trading while futures were almost non-active. As such, the deal could give Pakistan’s only national stock exchange a new international look with the entry of such mega players.
This approach is also expected to bring in investment, experience, technological assistance and new products. In addition, the investment will help promote economic and financial cooperation between China and Pakistan.