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September 12,2018

Foreign investors allowed to buy up to 10pc total outstanding PSX shares

Danyal Haris

KARACHI: Pakistan Stock Exchange (PSX) allowed foreign investors to purchase up to 10 percent of the total outstanding shares of PSX Limited, the company formed after the completion of demutualisation in 2016, a statement said on Tuesday.

All foreign investors are now be able to buy PSX shares across any market of the exchange, until further notification, it added.

Foreign investors can buy the shares of PSX Limited, which is listed on the PSX through ready market during trading or if some institutions have foreign investors then they can also buy the shares after market closure as well.

Hamad Aslam, director research at Elixir Securities said the limit/cap on foreign investors holding shares of PSX was still 10 percent of outstanding shares, i.e. around 80 million shares.

“However some foreigners have recently offloaded

their shareholding in the stock, which has created some space for other foreign investors to fill,” Hamad added.

He explained that with 10 percent cap continuing, foreign investors could now buy an additional 2 million shares.

On June 26 of this year, the PSX had placed restrictions on the purchase of shares on the country’s stock exchange by foreign investors as the aggregate position limit of foreign investors (other than foreign anchor investors) in PSX shares had reached the threshold of 10 percent of the total issued share capital of the exchange.

Regulation 43(I) of Stock Exchanges (Corporatization, Demutualization & Integration) Regulations 2012 disallows foreign persons to collectively acquire/hold, whether directly or indirectly, more than 10 percent of the total issued share capital of the exchange.

They are however, under the regulations, permitted to sell their positions in the PSX, if so desired.

A Chinese-led consortium has purchased a 40 percent stake in the PSX in December 2016.

The value of the transaction was calculated to be Rs8.96 billion ($85 million).

The Chinese consortium comprises three Chinese exchanges — China Financial Futures Exchange Company Limited (lead bidder), Shanghai Stock Exchange and Shenzhen Stock Exchange.

Together they have 30 percent of the strategic stock while two local financial institutions — Pak-China Investment Company Limited and Habib Bank Limited — will pick up 5 percent each, the maximum permitted to a single institution under the regulations.

The significant feature of the deal lies in the fact that it is the first such sale of strategic interest in a bourse in the regional markets. Furthermore, it was the Chinese bourse’s first foray in an acquisition outside China.


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