A consortium of Chinese companies, including its three exchanges, has bought a 40% stake in Pakistan Stock Exchange (PSX) for US$85m.
The bid was submitted on December 22 last year after PSX, formerly known as the Karachi Stock Exchange, announced a week earlier that it was looking to sell 40% equity stake held by existing shareholders. The bid submitted by Chinese Consortium emerged as the highest and most acceptable under the relevant regulations, the PSX said in a statement announcing the deal.
The statement said that the consortium comprises of three Chinese Exchanges; China Financial Futures Exchange, Shanghai Stock Exchange and Shenzhen Stock Exchange, each picking up a 30% stake in PSX. The other members of the consortium, Pak-China Investment Co and Habib Bank, bought 5% each.
This is the first time that any Chinese companies have acquired stakes in a foreign stock exchange, although it is not unusual for a foreign entity to own shares in a foreign stock exchange. And numerous stock exchanges across the world are linking up with foreign counterparts more and more.
Exchanges link up
As reported, the Bermuda Stock Exchange and the Channel Islands Securities Exchange signed a memorandum of understanding in November, following the lead of the likes of London and Frankfurt and the Hong Kong and Shenzhen and Shanghai stock exchanges with agreements being formulated.
A consortium of Chinese companies has also been reportedly trying to acquire the Chicago Stock Exchange for nearly a year but has been facing resistance from a group of US senators. China is also now trying to connect the Shanghai stock exchange with the one in London. It has recently connected the Shanghai exchange with those in Hong Kong and Shenzhen.
The China Securities Regulatory Commission has said that it supports the acquisition, and expressed the hope that the risks involved are within limits. “This investment will help broadening economic and financial collabora tion between China and Pakistan and will help implement the Belt and Road Initiative and the China-Pakistan Economic Corridor,“ the Shanghai Stock Exchange said in a statement.
The PSX was set up in January 2016 when the Lahore, Karachi and Islamabad stock exchanges consolidated into one bourse.