Shanghai Bourse in Bid to Buy 40% Stake in Pakistan Stock Exchange
The Shanghai Stock Exchange has submitted a letter of intent to buy up to 40% stake in the Pakistan Stock Exchange, according to report in The Nikkei Asian Review. The Shanghai Stock Exchange has the world's fourth largest market cap. The possible Pakistan tie-up could encourage Chinese companies to expand into the South Asian country and perhaps even list on the PSX.
In August this year, Bloomberg News reported Shanghai Electric's US$1.6 billion for 66% stake in K-Electric, Karachi's main electric utility.
Multinational Acquisitions in Pakistan:
In July 2016, two multinational giants acquired 2 Pakistani companies as part of their growth strategy to establish presence in Pakistan.
Dutch dairy giant FrieslandCampina acquired 51 % of Karachi-based Engro Foods Limited, the second largest dairy producer in Pakistan.
In the same week in July, Turkey's Arcelik announced purchase of Dawlance, Pakistan's market-leading home appliance maker.
Both cited opportunity for double-digit growth in the emerging market as the main reason for their acquisitions.
If the Shanghai Bourse's bid succeeds, it will represent the first purchase of a stake in a foreign stock exchange by a Chinese bourse. In June, global index provider MSCI upgraded Pakistan to emerging markets status while keeping Vietnam as a frontier market, because the former has much better market liquidity.
The Shanghai Stock Exchange has the world's fourth largest market cap. The possible Pakistan tie-up could encourage Chinese companies to expand into the South Asian country and perhaps even list on the PSX.
Pakistan Top Performing Market in Asia:
As of Sept 30, 2016, KSE100 index, the PSX's key stock index, has gained almost 24 percent year to date making Pakistan the best performing market in Asia. Vietnam and Indonesia follow with returns of 18% and 16.8%, respectively, while India’s Sensex Index has gained only 6.7%.
Year-to-date, the Global X MSCI Pakistan ETF (PAK) has gained 21.7%, according to Barron's Asia.
PSX official Ayyaz Afzal told The Nikkei Asian Review that "Shanghai is one of two stock exchanges who submitted us letters of intent (to acquire PSX stakes)".
The other bidder is a bourse in the Middle East. Afzal said the PSX could receive additional letters of intent by December, and "before March 2017, I think there will be some positive news about the strategic investor," he said.
A total of 576 companies are listed on the PSX, with an aggregate market cap of slightly higher than 8 trillion rupees (US$80 billion), according to Nikkei Asian Review. Pakistan, the world's sixth most populous nation, is home to some 190 million people. Its economy in 2015 was the globe's 41st largest, at $270 billion.
ADB Pakistan Forecast:
The Asian Development Bank (ADB) has recently raised Pakistan's economic growth forecast for fiscal year 2017 (from July 2016 to June 2017) from 4.8% to 5.2%. The Bank also sees brighter outlook for the the entire South Asian region. However, the prospects of even a limited India-Pakistan war could derail the economies of the entire South Asia region. I hope that sanity will prevail in New Delhi to tone down its war rhetoric, abstain from escalation and maintain the current economic momentum.
Summary:
Pakistan's economic recovery is in full swing with double digit growth in multiple industries, including auto, pharma, chemicals, cement, fertilizers, minerals, etc. It is expected to pick up steam over the next several years with new investments on the back of China-Pakistan Economic Corridor related projects. Prospects of even a limited war in South Asia could derail the economies of the entire region. I hope that sanity will prevail in New Delhi to abstain from escalation and maintain the current economic momentum.
Related Links:
Haq's Musings
ADB Raises Pakistan GDP Growth Forecast
Is Pakistan Ready For War With India?
India's Israel Envy: Surgical Strikes in Pakistan?
Growing Middle Class in Pakistan
Rising Energy Consumption
China-Pakistan Economic Corridor
Pakistan's Thar Desert Sees Development Boom
In August this year, Bloomberg News reported Shanghai Electric's US$1.6 billion for 66% stake in K-Electric, Karachi's main electric utility.
Multinational Acquisitions in Pakistan:
In July 2016, two multinational giants acquired 2 Pakistani companies as part of their growth strategy to establish presence in Pakistan.
Dutch dairy giant FrieslandCampina acquired 51 % of Karachi-based Engro Foods Limited, the second largest dairy producer in Pakistan.
In the same week in July, Turkey's Arcelik announced purchase of Dawlance, Pakistan's market-leading home appliance maker.
Both cited opportunity for double-digit growth in the emerging market as the main reason for their acquisitions.
Shanghai Bourse's Bid:
The Shanghai Stock Exchange has the world's fourth largest market cap. The possible Pakistan tie-up could encourage Chinese companies to expand into the South Asian country and perhaps even list on the PSX.
Pakistan Top Performing Market in Asia:
As of Sept 30, 2016, KSE100 index, the PSX's key stock index, has gained almost 24 percent year to date making Pakistan the best performing market in Asia. Vietnam and Indonesia follow with returns of 18% and 16.8%, respectively, while India’s Sensex Index has gained only 6.7%.
Year-to-date, the Global X MSCI Pakistan ETF (PAK) has gained 21.7%, according to Barron's Asia.
PSX official Ayyaz Afzal told The Nikkei Asian Review that "Shanghai is one of two stock exchanges who submitted us letters of intent (to acquire PSX stakes)".
The other bidder is a bourse in the Middle East. Afzal said the PSX could receive additional letters of intent by December, and "before March 2017, I think there will be some positive news about the strategic investor," he said.
A total of 576 companies are listed on the PSX, with an aggregate market cap of slightly higher than 8 trillion rupees (US$80 billion), according to Nikkei Asian Review. Pakistan, the world's sixth most populous nation, is home to some 190 million people. Its economy in 2015 was the globe's 41st largest, at $270 billion.
ADB Pakistan Forecast:
The Asian Development Bank (ADB) has recently raised Pakistan's economic growth forecast for fiscal year 2017 (from July 2016 to June 2017) from 4.8% to 5.2%. The Bank also sees brighter outlook for the the entire South Asian region. However, the prospects of even a limited India-Pakistan war could derail the economies of the entire South Asia region. I hope that sanity will prevail in New Delhi to tone down its war rhetoric, abstain from escalation and maintain the current economic momentum.
Summary:
Pakistan's economic recovery is in full swing with double digit growth in multiple industries, including auto, pharma, chemicals, cement, fertilizers, minerals, etc. It is expected to pick up steam over the next several years with new investments on the back of China-Pakistan Economic Corridor related projects. Prospects of even a limited war in South Asia could derail the economies of the entire region. I hope that sanity will prevail in New Delhi to abstain from escalation and maintain the current economic momentum.
Related Links:
Haq's Musings
ADB Raises Pakistan GDP Growth Forecast
Is Pakistan Ready For War With India?
India's Israel Envy: Surgical Strikes in Pakistan?
Growing Middle Class in Pakistan
Rising Energy Consumption
China-Pakistan Economic Corridor
Pakistan's Thar Desert Sees Development Boom
Comments
Amin Rajan, chief executive of Create Research, the consultancy, said: “These numbers are scary. Active managers need a root and branch look at their investment processes to retain their relevance in today’s surreal investment landscape.”
According to the analysis, 99 per cent of actively managed US equity funds sold in Europe have failed to beat the S&P 500 over the past 10 years, while only two in every 100 global equity funds have outperformed the S&P Global 1200 since 2006. Almost 97 per cent of emerging market funds have underperformed.
Daniel Ung, director of research at S&P Dow Jones Indices, said: “The figures are startling.”
Asset management experts believe the findings will exacerbate investor concerns about overpriced, underperforming active funds, and will ultimately push investors into cheaper indexed and exchange traded funds.
Stewart Aldcroft, senior adviser on the Asian fund industry at Cititrust, the fund services business of Citigroup, the US bank, said: “The S&P figures have become a massive boon for the ETF industry, which has been able to use them to show the benefit of passive investing.
“The active industry has built a whole range of arguments against [S&P’s statistics], but until they start to consistently achieve better returns, they will continue to be on the back foot.”
Last week politicians and consumer protection groups questioned the integrity of Europe’s €13.3tn asset management industry at an event specifically convened to look at the role of the asset management market.
Attendees at the meeting, held at the European Parliament and organised by Sven Giegold, a Green MEP, accused investment houses of overcharging their clients and failing to put investors first.
Mr Giegold, who co-organised the event with Sirpa Pietikäinen, an MEP from the European People’s party, said that “high costs” were hurting investment returns.
Assets managed in passive mutual funds, which provide lower-cost exposure to markets by tracking an index, have grown four times faster than traditional active products since 2007, according to Morningstar, the data provider.
Assets held in passive mutual funds have grown 230 per cent globally, to $6tn, since 2007. However, assets held in active funds total $24tn.
* SEP to buy 66.4 pct of K-Electric for $1.77 bln
* Abraaj selling after initial investment in 2009
* Part of increased Chinese investment into Pakistan (Adds details, context)
By David French
DUBAI, Oct 30 Abraaj Group has agreed to sell its majority stake in Pakistan's K-Electric to Shanghai Electric Power Co (SEP) for $1.77 billion, the emerging market-focused private equity firm said on Sunday.
The transaction is the largest M&A deal in Pakistan in a decade, and comes at a time of heightened Chinese interest in investing in the South Asian nation as part of its "One Belt, One Road" initiative.
Abraaj-controlled KES Power will divest the 66.4 percent stake subject to regulatory approvals being obtained.
SEP was among a number of Chinese bidders, including China Southern Power Grid, which were lining up to acquire the stake, sources told Reuters in August.
Chinese companies' interest comes after China last year announced energy and infrastructure projects worth $46 billion in Pakistan, with a view to opening a trade corridor linking western China with the Arabian Sea.
K-Electric is Pakistan's biggest electricity company, supplying power to 2.5 million customers in and around Karachi, the country's biggest and wealthiest city.
The private equity firm first acquired its stake in K-Electric in 2009, but said in June 2014 that it had mandated Citigroup to evaluate options for the investment.
"SEP will leverage its own strengths as a strategic investor and further realize K-Electric's potential to provide better services to the people of Pakistan and the government of Pakistan," SEP Chairman Wang Yundan said in the statement. (Editing by Andrew Torchia and Susan Fenton)
Karachi: Pakistan’s main bourse is to sell a 40 per cent stake next week, a company official said on Friday, citing Chinese and British consortia as among the prospective buyers.
At least 17 entities have expressed an interest in the Pakistan Stock Exchange (PSX), whose benchmark stock index was one of the best performing indices worldwide in 2016, gaining 38 per cent so far.
The PSX is currently owned by more than 300 Pakistani brokers.
“We are opening bidding for the 40 per cent share of the PSX on December 15,” Shahzad Chamdia, chief of a PSX divestment committee, told AFP.
Analysts estimate the deal will be worth around $225 million (Dh826.2 million), but the committee declined to comment.
“We have the reference share price being evaluated by a third party and will reveal it only on the bidding day,” Chamdia said.
Sources at the PSX said a consortium consisting of the Shanghai Stock Exchange, the Shenzen Stock Exchange and a Chinese fund is bidding, as well as another consortium of UK financial institutions led by Nasdaq Technology.
Chamdia did not reveal the names of either consortia but confirmed that Chinese and British stock companies were in the running.
Other bidders include Pakistani banks and financial institutions, but their chances of winning are thought to be unlikely.
Following the sale, the company plans to offer 20 per cent of its shares to the public, Chamdia said.
Under its stock exchange reforms, Pakistan merged its three stock exchanges — the Karachi Stock Exchange, the Lahore Stock Exchange and the Islamabad Stock Exchange — to form the PSX in January this year.
The benchmark KSE index of 100 shares was at its highest ever level of 45319 points on Friday, compared with 32816 points on January 1.
A Chinese-led consortium, including the Shanghai Stock Exchange, emerged as the top bidder Thursday for a 40% stake in the Pakistan Stock Exchange, one of the best-performing markets in Asia this year.
The Pakistan Stock Exchange, formerly the Karachi Stock Exchange, said the consortium includes three Chinese exchanges: the China Financial Futures Exchange as the lead bidder, the Shanghai Stock Exchange, and the Shenzhen Stock Exchange. The consortium also includes two Pakistani financial institutions: Pak China Investment Company Limited and Habib Bank Ltd.
The consortium’s winning offer, subject to regulatory approval, of 28 rupees ($0.27) per share values the stake at $85.5 million, and the exchange at $213.7 million.
The Pakistan Stock Exchange has been one of the best-performing markets in Asia this year, with its benchmark KSE 100-stock index gaining 42% this year. MSCI announced in June this year that it will upgrade Pakistan, earlier classified as a frontier market, to include it in its Emerging Markets Index.
The sale of the 40% stake is “big news not only for us, but also for the country,” said Shehzad Chamdia, chairman of the Pakistan Stock Exchange divestment committee. “I think it will be a game changer for our capital markets.”
Mr. Chamdia said the consortium’s offer is structured so that the three Chinese exchanges will have 30% of the exchange, while the two local partners will have 5% each. Along with board seats, the consortium will also get to nominate the CEO and CFO at the exchange, Mr. Chamdia said.
Pakistan has seen major Chinese investment in recent months, especially under the China-Pakistan Economic Corridor, a multibillion-dollar infrastructure program to upgrade the land route between the two countries and also boost Pakistan’s energy generation capacity.
Separately, China’s state-owned Shanghai Electric Power Co. acquired a controlling stake in K-Electric, the power utility in Karachi, Pakistan’s largest city.
Prime Minister Nawaz Sharif’s government considers boosting foreign investment a key pillar of its plan to revive Pakistan’s economy, and has pointed to the performance of the country’s stock exchange during his tenure as a sign of economic progress.
Dawlance introduces Hybrid Cooling Technology in New Refrigerator Series that provides the longest cooling retention for upto 6 days
Karachi: 20th July, 2020. The leading manufacturer of innovative home-appliances – Dawlance has further enriched its latest series of refrigerators, with the advanced “Hybrid Cooling Technology” that promises to provide longest cooling retention for up to 6 days. This helps to extend the life of frozen food items and as result provides longevity of life to food items; especially with the Eid ul Adha season approaching it will be able to provide additional value to our consumers.
Since Food-Preservation has now become a necessity, as the lifestyle in households have become much busier there is awareness among the consumers about the concept of food-security, as socio-economic pressures have increased. Every family must take conscious measures to reduce food-wastage. Fortunately, modern technology of Dawlance has provided this solution to meet the evolving needs of the society which aids in reducing food wastage & curb food scarcity on a bigger scale.
In Pakistan where load-shedding and power-outages are a daily occurrence, especially during summer’s season therefore food preservation becomes a major problem in the country.
The Director Sales and Marketing at Dawlance – Syed Hasan Jameel stated that: “Food-wastage is a global concern now and our research indicates that the masses are more aware of the concept of food-security. So, our new range of products will prevent food-wastage despite the frequent power outages in Pakistan.”
Along with the Hybrid Cooling Technology, Dawlance has also introduced 2 other core technologies within its previously launched new refrigerator series, that reflect; “Innovation inspired by nature”. These include; the ‘Nature Lock Technology’ that keeps fruits and vegetables fresh for up to 20 days and the ‘Vitamin-Fresh Technology’ that preserves vitamin A and C for longer durations. Dawlance is a wholly-owned subsidiary of Arçelik – the largest enterprise in Turkey and the 3rd largest manufacturer of home appliances in Europe. It is renowned for extensive research and highly-responsive Customer-Care based on multinational standards and a global vision to produce the highest level of quality.
https://www.thenews.com.pk/print/760808-growing-debt-market-crucial-to-pakistan-s-economic-progress
Growing and dynamic debt market is crucial for the economic progress of Pakistan and it is imperative for all stakeholders of the financial ecosystem to take the country’s debt market to regional and international levels, PSX chief executive officer said on Friday.
Farrukh Khan, chief executive officer of Pakistan Stock Exchange (PSX) said this during a gong ceremony to welcome Bank of Punjab (BOP) onboard as a market maker for conventional and shariah-compliant debt instruments on PSX.
“BOP is one of the first banks to become a market maker on PSX. We welcome this development as this will lead to increased growth and dynamism in the debt market, which is crucial for the economic progress of Pakistan,” Khan said in a statement. “We believe this step will play a significant role towards achieving that end. We are also in discussions with BOP to bring some of their SME [small and medium enterprise] clients to list on the new GEM [growth enterprise market] board. This will also be an important development for Pakistan’s economy, the SME sector and PSX.”
Market makers perform the role of providing liquidity and depth to the market by facilitating investors to buy and sell securities through continuously quoting two way prices – bid and offer prices.
Zafar Masud, CEO of Bank of Punjab said the bank will be the first bank in the Pakistan market making for both conventional and shariah-compliant securities as well as corporate debt instruments at the PSX portal.
“This makes us the first public sector bank offering a bouquet of services in collaboration with PSX,” said Masud. “We see our role expanding beyond a market maker for debt securities. Through this agreement, we are committing to becoming a leading player in development of capital markets in Pakistan by enabling greater investor participation and enabling listing of more debt, equity and non-conventional instruments at PSX.”
“We can partner with PSX in promoting privatisation and listing of public sector projects for example Punjab thermal power and Quaid-e-Azam solar power through the stock exchange. Moreover, we plan to design instruments to bring projects like Kamyab Jawan Program, SME financing project and low cost housing scheme to PSX platform,” he said.