KARACHI: Trade in shares of Pakistan Stock Exchange (PSX) will start on the country’s main bourse on June 29, taking up the challenge of winning investors’ appetite in Asia’s one of the best but shaky markets.
The trade will kick off next week as the process of offer for sale of the country’s integrated bourse and its self-listing has been completed.
The share’s opening price will be Rs28/share as determined through book building process. Normal circuit breakers will be applicable on the opening price of shares in the ready market.
“Trading in the shares of PSX will start on the ready board from June 29 and all the transactions taking place in respect of this company will be settled on T+2 settlement basis, while the market lot of PSX will be 500 shares of Rs10 each,” said Muhammad Ghufran, deputy general manager at PSX.
Early this month, PSX completed the book-building process related to its 20 percent stake, put for public sale, in an overextended five-day period at the floor price of Rs28/share.
The public offering took place after Chinese-led consortium bought 40 percent (320 million shares) of PSX at a price of Rs28/share at around $85 million. The sale of strategic stake was in line with the demutualisation process.
“Given the dismal response PSX’s offer for sale received coupled with pressure the market is going through it is expected the bourse’s share will be witnessing considerable correction in its first trading days,” a broker said on condition of anonymity.
PSX has 39.81 percent shareholding in the Central Depository Company of Pakistan Limited (CDC) and 47.06 percent shareholding in the National Clearing Company of Pakistan Limited (NCCPL).
Just as PSX is the sole stock exchange of the country, so CDC is the sole central share depository of the country. NCCPL is the sole clearing and settlement platform of the country.
The PSX shares have already been declared eligible security by CDC and all the transactions will be settled through NCCPL, which has assigned company code/security symbol as ‘PSX’ and it will be categorized/quoted under investment companies/securities companies sector.
The Securities and Exchange Commission of Pakistan (SECP) approved the application for formal listing and quotation of PSX shares pursuant to Stock Exchanges (Corporatization, Demutualization and Integration) Act, 2012 and the Stock Exchanges (Corporatization, Demutualization and Integration) Regulations, 2012.
The country’s market performance has been stellar in the last few years with Bloomberg research indicating the benchmark KSE 100-share Index has been amongst the world’s top 10 best performers over the past five years.
Yet, market capitalisation of listing companies to GDP ratio is still around 35 percent as compared to more than 70 percent in other Asian markets and 100 percent or more in the developed markets, indicating significant medium-term upside potential in market valuations.
Analysts said Chinese acquisition will lead to transfer of modern financial technology to the exchange, help it roll out new financial products and expand the bourse’s products portfolio.
PSX revenue rose eight percent year-on-year to Rs1.075 billion for nine months ended March 31, while its core operating revenue increased 29 percent to Rs581 million.
The average daily traded value in the ready cash market, which is the basis of trading fee charged by the exchange, amounted to Rs16 billion during the nine-month period versus Rs9.6 billion a year earlier.
The KSE 100-share Index surged 26.84 percent between July 2016 and March 2017 with overall market capitalisation, which is the basis of the exchange’s recurring listing fees, up to $97.9 billion as at May 15, 2017 from $72.7 billion as at June 30, 2016.
PSX is the first capital market in South Asia to opt for self-listing. The exchange will host an event on June 30 to commemorate the public offer.