Chinese consortium wins bid for 40% stake in Pakistan Stock Exchange

[Cherokee]

Congratulations China . Wish they get 60 percent !! .

 

[LeGenD]

Its actually good, it will brings better management having Chinese stakes in it, less chances of stock market manipulation by Pakistani stock brokers as was done by non other than Mr. Shaukat Aziz.

Yes, sell a large chunk of your assets to China now, at cheap prices.

We are well on our way towards becoming Chinese lapdog. Pakistan zindabad.

 

[AZADPAKISTAN2009]

If Pakistan's stock exchange's value goes from 220 MIllion (current) to 20 Billion after China's involvement it is a win win deal for Pakistan

60% of 20 Billion = 12 Billion


It remains to be seen how far the Stock Exchange and Companies would thrive to individually boost the value of the stock exchange

[10 Billion , 50 Billion , 100 Billion , 500 Billion, ????]


What is bigger 100% of 220 Million

Or 12 Billion with 60% share , with China on board

China is a big player

With Chinese mind set we might see advance offering to World Traders Online easy access to buy stocks in Pakistani companies

Top 10 Stock exchanges and Net Worth

1 New York Stock Exchange
United States
New York 19,223 Billion
2 NASDAQ United States New York 6,831Billion
3 London Stock Exchange Group United Kingdom London 6,187 Billion
Italy
4 Japan Exchange Group – Tokyo Japan Tokyo 4,485 Billion
5 Shanghai Stock Exchange China Shanghai 3,986 Billion
6 Hong Kong Stock Exchange Hong Kong Hong Kong 3,325 Billion
7 EU 3321 Billion
8 Shenzen , china 2283 Billion
9 Canada 1939 Billion
10 Germany 1762


??? Pakistan / China Stock Exchange (PSX) just being born

Where can Pakistan/China Stock Excange can go next (PSX)?

Right now mere BABY steps we are assuming the stock exchange would be worth
20-50 Billion and I did example of calculation on 60% ratio on 20 billion figure but we can see world wide the stock exchanges are worth 1000 Billion or more

 

[xyxmt]

Yes, sell a large chunk of your assets to China now, at cheap prices.

We are well on our way towards becoming Chinese lapdog.

what kind of asset is a stock market?
do you have any idea what is a stock market

 

[LeGenD]

what kind of asset is a stock market?
do you have any idea what is a stock market

Yes.

Whose shares do you think China just bought? Of Indian corporations?

 

[Mr.Nair]

Pakistan should do China a favor: become its province.

Why bother with such formalities?

China fooling pakistan and it will take 30 years to complete CPEC-Pakistan media and pakistan experts

China will not spare Pakistan if CPEC Fails, its China Stake not Pakistan-Pakistani expert in pakistani media

So in reality and should be written in a golden plate- There is no friendship but only self interest in this world, even one like it or not.

 

[xyxmt]

Yes.

Whose shares do you think China just bought?

better aim for bigger assets, calling stock market, PIA and Steel mills your assets can ruin the status of your country.

 

[RIP Pak LAW]

China fooling pakistan and it will take 30 years to complete CPEC-Pakistan media and pakistan experts

China will not spare Pakistan if CPEC Fails, its China Stake not Pakistan-Pakistani expert in pakistani media

So in reality and should be written in a golden plate- There is no friendship but only self interest in this world, even one like it or not.

LOL some of these analysts have never seen such a huge investment happening in Pakistan ever before so naturally they are skeptic about it.

 

[xyxmt]

China fooling pakistan and it will take 30 years to complete CPEC-Pakistan media and pakistan experts

China will not spare Pakistan if CPEC Fails, its China Stake not Pakistan-Pakistani expert in pakistani media

So in reality and should be written in a golden plate- There is no friendship but only self interest in this world, even one like it or not.

this should be kept secret by India not publicly disclosed until the disaster happens and then celebrations. not a good policy by India to warn the enemy about incoming disaster

 

[LeGenD]

better aim for bigger assets, calling stock market, PIA and Steel mills your assets can ruin the status of your country.

Bro, those companies are our assets and they are underperforming due to rampant corruption. Instead of fixing the real problem, our leaders are selling our assets to foreign entities. How is this practical for us?

China will become increasingly influential in Pakistani affairs and our state would be like a banana republic once again. Please keep in mind the disasters of North Korea and Venezuela.

We need a balanced approach in how we approach foreign entities. More importantly, we need to address the menace of corruption. However, people continue to vote PML(N). I see this nation slowly but surely loosing its footing and identity.

 

[RIP Pak LAW]

China will not spare Pakistan if CPEC Fails, its China Stake not Pakistan-Pakistani expert in pakistani media

LOL the line was to please and fool our jealous neighbors . CPEC won't fail especially when it has Army's full backing and politicians infact political parties here are fighting to get the good share of it for their respective province/region that's what make CPEC project so unique,beneficial and interesting.

 

[Hakikat ve Hikmet]

China will not spare Pakistan if CPEC Fails, its China Stake not Pakistan-Pakistani expert in pakistani media

LOL the line was to please and fool our jealous neighbors . CPEC won't fail especially when it has Army's full backing and politicians infact political parties here are fighting to get the good share of it for their respective province/region that's what make CPEC project so unique,beneficial and interesting.

No risks no gains. Why the folks are so afraid of trade??? With this move Pak stock exchange now has the potential to enlist lots of new companies which will be exponentially formed as the economy grows. That means more trade volume, bonus, commission etc. ,which all turn to tax revenue for the government at the federal, state and city levels. What's bad in it???

 

[AZADPAKISTAN2009]

Indian , don't cry much or you would need to build a dam to stop the tears

 

[艹艹艹]

No risks no gains. Why the folks are so afraid of trade??? With this move Pak stock exchange now has the potential to enlist lots of new companies which will be exponentially formed as the economy grows. That means more trade volume, bonus, commission etc. ,which all turn to tax revenue for the government at the federal, state and city levels. What's bad in it???

You're right. You're a smart man who knows the economy.

 

[SBD-3]

I'd like to get your thoughts on this. Was it necessary to sell 40% of the PSX?

Its money talks, after the demutualization of the exchange, the guarantors or TRE holders were offered the form of shares to the extent of guaranteed amount in case of any extreme incident.
The reserve price advised by the lead manager was 26 PKR. However, out of 4 strategic investors, three withdrew their bids, means that the price was fair to expensive for them. And this is not the first time the bourse has been offered for sale
All previous (Qatar,London, Istanbul on stand alone and Dubai) interest fell through and had Chinese not be "given the time to come up with a bid" this sale would have also faced a similar fate
http://www.dawn.com/news/263254/borse-dubai-expresses-interest-in-kse
http://tribune.com.pk/story/1104547/divestment-psx-in-talks-with-qatar-istanbul-exchanges/
http://www.brecorder.com/top-stories/0:/116328:chinese-consortium-top-bidder/?date=2016-12-23
https://www.thenews.com.pk/print/81201-KSE-in-talks-with-London-for-stakes-sale

Crucial for valuation would be the 20% of KSE being offered to general public through IPO which will give us a fair estimate of how investment community in general prices PSX. As per market research, price is fair-slightly above expectations.

Landmark decision for Pakistan Stock Exchange



In a landmark decision for the sixty seven year old bourse, the strategic ownership of Pakistan Stock Exchange(PSX) will be shifted from local brokers to the Chinese consortium comprising of three Chinese exchanges: China Financial Futures Exchange Company Limited (lead bidder), Shanghai Stock Exchange and Shenzhen Stock Exchange. Together they will take up 30% of the strategic stock while two local financial institutions Pak-China Investment Company Limited and Habib Bank Limited will pick up 5% each. With 40% of the PSX equity already vested with the 200-strong stock broker fraternity, the remaining 20% would be offered in an initial public offering (IPO) to the general public.

At a price of PKR28/share, this gives a total value of USD213mn for PSX, around 2.8x its book value per share, a decent premium considering its earnings track record. This will greatly improve the liquidity and capital adequacy of 200 brokers as currently the non-listed investment was not eligible for capital adequacy.

Once the deal is formally signed, around USD85mn cash inflow is from 40% stake sale is expected to be received in 1QCY17, which translates into PKR45mn/broker. Subsequently an IPO of 20% stake will be conducted later in 2017 which should result in USD43mn inflow for brokers translating into PKR22mn/broker. The remaining 40% stake will remain with brokers which can be used for capital adequacy, while some brokers had already mandated the divestment committee to sell the 80% of this in the strategic bidding, thus the cash inflow maybe even higher for them. Overall the cash inflow to brokers will likely increase their proprietary trading and even increase their funding in the leveraged markets.

We are more bullish on the long term prospects as having an international operator will provide the much needed technological improvement and greatly improve the perception of PSX in world markets. We are especially excited about the launch of new derivative products and possible cross listings which will likely add much needed depth to the current predominantly cash based market.

PSX background

The Exchange was incorporated in 1949 as a company limited by Guarantee. As a result of demutualization, the Exchange stood corporatized and demutualized as a public company limited by shares under the name of ‘Karachi Stock Exchange Limited’, with effect from August 27, 2012. Subsequently, the three stock exchanges namely, Karachi Stock Exchange, Lahore Stock Exchange & Islamabad Stock Exchange were integrated into Pakistan Stock Exchange Limited (PSX) on January 11, 2016.





Regards,


Taha Khan Javed, CFA

Director Research & Business Development



Alfalah Securities (Pvt.) Ltd | A subsidiary of Bank Alfalah Ltd

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