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Did the Chinese acquire PSX at a discount?

LAHORE: Leading brokerages and investors in the country believe the acquisition of Pakistan Stock Exchange by a Chinese consortium in January 2017 for $85 million was at a discount in comparison to its purchase of Dhaka Stock Exchange last week.

A Chinese consortium outlasted competition from India’s National Stock Exchange to acquire 1.8 billion shares of Dhaka Stock Exchange last week for $122 million.

This acquisition has drawn comparisons to a similar deal clinched for acquisition of Pakistan Stock Exchange in early 2017 and has left stock-brokers and brokerage houses wondering if Pakistan was “short-changed” in this deal, reported Dawn.

Although the bidders for the DSE, included two joint bidders Shanghai and Shenzhen Stock Exchange who also were party to the acquisition of PSX in January 2017.

The syndicate which bid and acquired PSX included Chinese Financial Futures Exchange Company, Shanghai Stock Exchange, Shenzhen Stock Exchange and two domestic partners.

According to reports, the Chinese consortium is said to have offered to sacrifice profits on their investments during the first ten years.

Ironically, the Chinese have four directors on the PSX compared to only one on the Dhaka Stock Exchange.

PSX divestment committee, Shehzad Chamdia who negotiated the PSX deal with the Chinese believes the deal wasn’t a discount because the volume of trade, profitability and size of DSE was much more than our stock market.

He highlighted the investors in DSE stood at 2.5 million, which was 10 times the number of investors in PSX.

Brokerage house Insight Securities calculations however suggest the rupee was valued at 104.80 to a dollar when PSX was purchased at end-December 2016 against the Bangladeshi currency taka which stood stable at 83.5 to dollar on Feb 20th, 2018 when the DSE deal was inked.

As per this estimate, the DSE valuation was around $488 million, whereas PSX valuation was less than half, at $213 million.

According to MCB-Arif Habib Savings and Investments Ltd, vice chairman Nasim Beg the Chinese strategy was to acquire, and the price paid was peanuts for them.

He added the Chinese were bellicose bidders in case of DSE.

Source: https://profit.pakistantoday.com.pk/2018/02/26/did-the-chinese-acquire-psx-at-a-discount/

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UK economy has a lot to offer to Pakistani businessmen: Lord Nazir

LAHORE: British Parliament Member Lord Nazir Ahmed said on Saturday that many sectors of United Kingdom’s economy had vast space for Pakistani businessmen and they could get good share through B2B (Business to Business) contacts, modern business techniques and technologies.

He was speaking at Lahore Chamber of Commerce and Industry (LCCI), where LCCI President Malik Tahir Javaid and Senior Vice President Khawaja Khawar Rashid also spoke on the occasion, while Zafar Iqbal Chaudhry, Awais Saeed Piracha, Naeem Hanif, Shahid Nazir, Zafar Iqbal, Muhammad Wasim and Muhammad Chaudhry were present in the meeting.

Lord Nazir Ahmed said that those countries are leading the economic front where the private sector was playing an active role, asserting that Pakistani business community had the ability to turn Pakistan into an economic powerhouse.

While talking about Pakistani businessmen, he said, they should come forward and join hands with their foreign counterparts, adding that Pakistani expatriates were playing a laudable role in the economy of UK and were ready to facilitate their Pakistani brothers who want to do business.

The Member British Parliament also emphasised the need for collective efforts to increase the existing trade volume between the two countries.

Lord Nazir said, “India is utilising all its energies and propagating against Pakistan to cause huge economic loss but I have raised voice against this conspiracy at all international forums”.

LCCI President Malik Tahir Javaid said that Pakistani business community attached a lot of importance to Lord Nazir Ahmed’s role in support of the Kashmir cause in the House of Lords. He said that businessmen truly admired his efforts and stance to raise the voice for Kashmir.

He said that despite the GSP Plus status, Pakistan had not been able to enhance its exports to the UK. He said that there was ample potential for joint ventures between the two countries in areas of auto parts, processed food, pharmaceuticals, leather made-ups, light engineering and surgical instruments.

Malik added that the UK should provide trade facilitation to Pakistani businesses.

The UK has sizeable imports of textiles, leather, furniture, paper, plastics and footwear from China. Pakistan can be considered for these items as it has great export potential in these areas.

The LCCI President mentioned that trade diplomacy had a crucial role and for that matter, Lahore Chamber kept organising international business delegations. He informed Lord Nazir Ahmed that last week, he headed a delegation to Malaysia, Thailand and Indonesia which proved very successful.

He further said that both countries should not remain limited to strengthening trade ties rather Pakistan and UK should exchange parliamentarian, cultural and student delegations too.

Source: https://profit.pakistantoday.com.pk/2018/02/17/uk-economy-has-a-lot-to-offer-to-pakistani-businessmen-lord-nazir/

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China and India take battle for influence to Dhaka stock market

NEW DELHI — China and India are vying to invest in Bangladesh’s stock exchange, a battle that has implications for the two regional powerhouses’ rivalry in South Asia.

The Dhaka Stock Exchange plans to sell 25% of its shares. On one side is a consortium of the Shenzhen and Shanghai stock exchanges. Ranged against them is a consortium made up of India’s National Stock Exchange, Nasdaq of the U.S. and others. The exchange will select one of the groups as its preferred bidder on Monday, at the earliest, and submit a report to the Bangladeshi Securities and Exchange Commission for approval of the sale.

The Chinese consortium has offered 22 taka (26 cents) a share, while the Indian-led bidder has offered 15 taka. Local media report the Chinese bidder has also offered technical assistance worth nearly $37 million, in addition to the share purchase valued at $120 million.

India’s National Stock Exchange is a private-sector company, but it was set up by a group of big financial institutions at the behest of the government. Chinese exchanges, meanwhile, take their cue from Beijing. This adds to the impression that the battle for the stake in the Bangladeshi bourse is part of the larger rivalry between China and India.

The Indian side appears to be at a disadvantage, but National Stock Exchange CEO Vikram Limaye flew to Dhaka on Feb. 11 to lobby the Securities and Exchange Commission, according to sources.

Vikram Limaye, CEO of India’s National Stock Exchange © Reuters

The Dhaka exchange has, up to now, been funded by small, local securities companies. Because the bourse is demutualizing itself, it is seeking a foreign strategic partner. It believes selling the one-fourth stake will help modernize the country’s capital markets.

Beijing is trying to make the yuan a major international currency, asking its trading partners to use the Chinese currency to settle some transactions. If the Chinese consortium wins the bid for Dhaka exchange and sends directors to help run it, China may be able to list yuan-denominated financial products there in the future. For Chinese companies operating in Bangladesh, listing their shares on the exchange would allow them to finance their operations locally.

Another Chinese consortium that includes the Shenzhen and Shanghai exchanges bought a 40% stake in the Pakistan Stock Exchange, the country’s only bourse, for nearly $90 million in January last year. Economic ties between the two countries are deepening, with many Chinese businesses operating in Pakistan, spurred by work on the China-Pakistan economic corridor. If these companies list their shares on the Pakistan Stock Exchange, China’s influence will grow.

Stock brokers monitor the market at the Pakistan Stock Exchange in Karachi. © AP

But India has trump cards of its own. Bangladesh shares more than 90% of its land border with India and leaders of the two countries have visited each other almost every year recently. A railway linking the eastern Indian city of Kolkata and the industrial city of Khulna in Bangladesh’s southwest began operating last November. In addition to strengthening their economic ties, the neighbors have agreed to bolster their defense cooperation. Indian Prime Minister Narendra Modi maintains closer ties with Bangladesh than he does with other neighboring countries.

For China, relations with Bangladesh are fairly distant compared with the other countries in South Asia, but it is trying to change that. In 2016, Xi Jinping became the first Chinese president to visit the country, pledging loans worth $20 billion. That is 10 times more than Modi offered when he visited Dhaka the previous year.

Source: https://asia.nikkei.com/Politics-Economy/International-Relations/China-and-India-take-battle-for-influence-to-Dhaka-stock-market

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CPEC to bring socio-economic benefit to whole region: Ziyu

China’s infrastructure construction tycoon says Pakistan is his second home

Beijing

Terming Pakistan as his second home, Vice President, China Communication Construction Company (CCCC), Sun Ziyu has believed that China-Pakistan Economic Corridor (CPEC) would bring socio-economic benefits not only to China and Pakistan but also the neighbouring countries and world.
“I believe, the CPEC, a flagship project of the Belt and Road Initiative announced by Chinese President Xi Jinping for the shared prosperity of humankind, will benefit China, Pakistan, neighbouring countries and the world,” he said while talking to APP in an interview.
He informed that CCCC, dedicated to the construction, investment, development and operation of infrastructure in the countries along the Belt and Road Initiative (BRI) including Pakistan, was already working on various projects including the Gwadar Port under the CPEC framework.
Sun said that his company was one of world’s largest port designers and constructors, leading designers and constructors of highways, bridges and well-known comprehensive city developer, “We are planning construction of Gwadar smart city.”
He said that last year, his company’s new contracts in overseas achieved the total value of US$41 billion, the turnover of US$20.3 billion and a total profit of US$ 1.35 billion.
Having experience of dredging, international designing and expressway and bridges building, the company would construct a dry port in Gwadar.
“We have selected a land measuring five square kilometres for the dry port,” he added. China Harbour, a subsidiary of his company, was working on construction of East Bay Expressway project, he said. The vice president shared that his company was likely to play a pivotal role in the up-gradation and rehabilitation of Pakistan Railways under the CPEC, the project was at the planning stage.
He informed that his company had built a total of more than 10,000 kilometres of highways and signed contracts or built more than 2,000 kilometres of railways around the world.
The Mombasa-Nairobi Standard Gauge railway in Kenya completed and launched to operation last year had aroused the attention of Africa and the whole world, he said and added, “We are also accelerating the progress of such projects as the Nairobi-Maraba Railway in Kenya and the East Coast Rail Link of Malaysia with a contract value of nearly US$10 billion.
The vice president said that his company took part in construction of the bridges on the most important Karakuram Highway (KKH) in Pakistan, adding the project teams had almost become an emergency rescue squad for local government.—APP

Source: https://pakobserver.net/cpec-bring-socio-economic-benefit-whole-region-ziyu/

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Apple in talks for first order from Chinese memory chipmaker

Apple is in talks to buy storage chips from Yangtze Memory Technologies, a move that would mark the iPhone maker’s first buy from a Chinese memory chipmaker, the Nikkei reported on Wednesday.

Apple CEO downplays special dividend at shareholder meeting

Apple will use these chips in new iPhone models and other products for sale in the Chinese domestic market specifically, the Nikkei reported, citing two people familiar with the matter.

Apple confirms ‘no service’ issue with iPhone 7

Both Apple and Yangtze Memory did not immediately respond to requests for comment.

Source: https://tribune.com.pk/story/1635414/8-apple-talks-first-order-chinese-chipmaker/

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Foreign buyers express interest in Pakistani fruits and vegetables

ISLAMABAD: In the recently held exhibition in Berlin named “Fruit Logistica” more than 30 buyers who participated have shown interest in buying fruits and vegetables from Pakistan and demonstrated keen desire to avail trade opportunities which have emerged as a result of the China-Pakistan Economic Corridor (CPEC) project.

“The exhibition provides an effective international platform to enhance Pakistan’s horticulture industry’s exports and to inculcate awareness about most modern research and technological activities,” Federation Pakistan Chamber of Commerce and Industry (FPCCI) Patron-in-Chief and Vice-President Waheed Ahmed stated.

During this year eight Pakistani companies and 25 delegates participated in the exhibition and an exclusive stall representing the Pakistan Fruit and Vegetable Exporters, Importers and Merchants Association (PFVA) was also installed. Pakistan Ambassador Johar Saleem inaugurated the Pakistani pavilion.

According to Waheed, Ahmed, the European countries expressed the desire to purchase Pakistani mango, Russia expressed the desire to buy Pakistani potato while United Kingdom (UK), Holland, Norway and  Germany expressed keen interest in Pakistani dates. Similarly, buyers from Russia, Ukraine, Indonesia, United Arab Emirates (UAE) and Bahrain also expressed great interest to purchase Pakistani Kinnow. Keeping in view this overwhelming response, Pakistan is expected to get export orders up to $3 million.

“The exhibition has proved to be an effective international event for highlighting immense potential of Pakistani horticulture sector and offers excellent opportunities for investment in this specific sector,” he added.

During the three-day exhibition, Waheed Ahmed extended an invitation to prominent technology companies to visit Pakistan and also apprised them of the purpose and objectives of conducting a national conference in Pakistan in the near future with the collaboration of  PFVA  and  FPCCI.  “With the establishment of CPEC projects and economic zones the investors around the globe are focusing their attention on Pakistan and hence the foreign companies and investors would also be invited next year in the proposed national conference on horticulture sector,” he further said.

Waheed Ahmed expressed deep satisfaction and highly appreciated the extensive efforts of the Pakistani Embassy for making good arrangements and rendering assistance to Pakistani companies which participated in this mega event.

Source: https://profit.pakistantoday.com.pk/2018/02/12/foreign-buyers-express-interest-in-pakistani-fruits-and-vegetables/

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China agrees to accommodate Pakistan’s concerns on FTA

ISLAMABAD: During the 9th round of negotiations on China Pakistan Free Trade Agreement (FTA), the Pakistan delegation led by Commerce Secretary Mohammad Younus Dagha presented the demands of Pakistani exporters and industries for accommodating in the final draft of the CPFTA.

According to official sources, the demands included those from exporters to provide tariff concessions equivalent to the ASEAN countries. On the other hand, various industries and chambers had provided input to the Ministry of Commerce during pre-negotiations consultations, for protection of the local industry from Chinese imports by disallowing tariff concessions on several products.

Dagha also suggested incorporating clauses for safeguarding the industries and the economy from any undue pressure on the balance of payments position.

The Chinese side was led by Peoples Republic of China Ministry of Commerce Vice Minister Wang Shouwen and comprised of 16 officials of various Chinese ministries.

After intense negotiations for two days, the Chinese side agreed to accommodate these concerns and demands in the amended FTA which is expected to be signed in March when the Chinese vice minister will visit Islamabad along with his delegation.

It may be mentioned that these negotiations had started in 2012 to finalise the revised version of CPFTA.

Source: https://profit.pakistantoday.com.pk/2018/02/08/china-agrees-to-accommodate-pakistans-concerns-on-fta/

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Steel melting industry opposes tax break for Chinese firm

KARACHI: 

Pakistan Steel Melters Association (PSMA) has fiercely opposed the grant of duty and tax exemptions to China State Construction Engineering Corporation Limited (CSCEC), saying the concession will cost the national exchequer about Rs11 billion.

Under SRO 47(I) 2018, CSCEC, which is working on the Sukkur-Multan section of motorway, has been allowed duty-free import of construction material and machinery into Pakistan.

To record its reservations at the highest level, the PSMA has drawn attention of Prime Minister Shahid Khaqan Abbasi to this issue through a letter, requesting the premier to withdraw the disputed duty and tax exemptions offered to a foreign company at the expense of domestic steel sector.

Govt struggles to defend tax waiver to Chinese firm

In 2017, steel melting in Pakistan was coined as the fastest growing steel industry in the world as large-scale manufacturing data, published by the State Bank of Pakistan (SBP), showed that billet/ingot production had grown 62% year-on-year in the first four months of fiscal year 2017-18.

PSMA Senior Vice-Chairman Hussain Agha noted that the steel industry of Pakistan was gearing up for a massive $300-million capacity expansion in the next 24 months, which would lead to a manifold increase in the country’s revenue receipts.

“Chinese are our brothers in progress and we warmly welcome CPEC (China-Pakistan Economic Corridor), however, we must ensure that it is done on a fair and mutually beneficial basis,” a press release quoted Agha as saying.

The steel industry of Pakistan generates the largest amount in revenues within the growing industrial sectors of the country and also aims to meet the upcoming demand of CPEC projects by providing high-grade steel.

Agha, who is also Executive Director of Agha Steel Industries, said the first phase of Agha Steel’s project was expected to come on line in 2018, which would directly save the government at least $180 million per annum in import substitution and generate additional taxes for the government.

Senate panel to probe tax waiver to Chinese firm

New steel projects expected to come on stream in the next 12 months will save the national exchequer billions of dollars in import substitution.

“PSMA strongly objects to any policies that could hamper growth in Pakistan and SRO 47(I) 2018 will dampen future investments besides causing losses worth Rs11 billion to the government in revenue collection,” Agha said.

Source: https://tribune.com.pk/story/1628906/2-steel-melting-industry-opposes-tax-break-chinese-firm/

Pakistani exporters look to benefit as ‘currency war’ gains traction

KARACHI: 

As the rupee loses its value against major currencies, Pakistani exporters are trying to cash in on the opportunity.

Given rupee’s fall against the US dollar as well as the pound and Euro, exporters stand to benefit as a cheaper currency makes their products less expensive, helping them gain competitiveness. While the Pakistani currency shed over 5% versus the dollar, its fall against the euro and pound was much heavier given the greenback’s weakness in the international market.

The rupee has depreciated more than 6.5% against the euro in the last one month compared to just 2% against the US dollar. Against the pound, the rupee has lost over 10% in the last two months.

Rupee has weakened against all major currencies

“We will definitely benefit with the sharp appreciation of the euro against the rupee,” Multinational Export Bureau CEO Babar Khan told The Express Tribune.

However, not all exporters have deals in euro.

Fawad Anwar, managing director of Al Karam Textile Mills – one of the country’s leading composite units, said that they had stopped finalising business deals in euro due to its sharp fluctuations in recent years.

“Most of the business deals in recent years have been finalised in dollars mainly because of its stability,” he added.

He, however, said that the rupee devaluation against the dollar is a positive for all Pakistani textile exporters.

The PML-N government has remained a staunch supporter of a stronger rupee. However, after keeping the rupee artificially stronger for over four years, it finally allowed the rupee to lose its value last month. The rupee lost over 5% against the dollar in the second week of December 2017.

According to the Pakistan Bureau of Statistics (PBS), Pakistan’s textile exports in July-December 2017 touched $6.64 billion, up 8% compared with $6.15 billion in the same period of the previous year. With the help of government’s incentives and low base effect, textile exports are expected to rebound in coming months. One major incentive for textile exporters will be a weaker rupee.

Currency war

Since US President Donald Trump took charge more than a year ago, the US dollar is fast losing its value against major currencies. In the last one year, the dollar has lost over 16% and 14% against the euro and British pound, respectively.

The trade war debate got further credence last week when top officials of the Trump administration at Davos, Switzerland, strongly supported the case of a weaker dollar to support the US exports.

Khan, who runs two textile factories in Karachi that export most of their knitwear to the EU and the US, said that the threat of a ‘currency war’ between major economic powers will hurt global exporters.

“Currency war is not good for any economy, including Pakistan,” said Khan, “In response to the US move of weakening the dollar, other countries will also do the same and this will hit every other economy.”

Prioritising trade: Enhancing the country’s export competitiveness

But some believe the US administration will not be able to weaken the dollar after a certain limit.

“It’s easier said than done. I do not think Trump administration can go further with a weaker dollar,” said Anwar.

The stock markets in the US have been performing well and the Trump administration may have to increase the interest rates soon after which the dollar will gain value anyway, he added.

Source: https://tribune.com.pk/story/1621419/2-pakistani-exporters-look-benefit-currency-war-gains-traction/

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China’s belt and road lending set to rise, Morgan Stanley says

BEIJING (Jan 31): China’s sweeping push to increase international trade and infrastructure investment will likely get a boost this year from government support and better financial conditions in recipient countries, according to Morgan Stanley.

Investment to nations along the route of President Xi Jinping’s signature Belt and Road Initiative will grow at an annual pace of 14% between 2018 and 2020, compared with a contraction of 1.6% in 2016 and 2017. That will double total spending on the project to US$1.2 trillion to US$1.3 trillion by 2027, the bank said in a research note released Wednesday.

The trade and investment drive aims to connect Asia and Europe through a series of infrastructure projects. It’s at the core of Beijing’s national foreign policy strategy and was  added to the Communist Party constitution in October. Chinese money would also lift the exports and imports of Belt and Road countries by 10% and 5% respectively in the next decade, analysts led by Kevin Luo and Jenny Zheng in Hong Kong wrote in a note.

“The key domestic driver is Beijing’s new guidance on outbound investment — since late 2016, policy makers have tightened capital controls on ‘irrational’ overseas investment, while continuing to support B&R investment,” the analysts wrote, adding that the Belt-Road share of overall outward investment rose to 12% in 2017 from 8% in 2016.

Malaysia, the Philippines, Indonesia, Russia, Saudi Arabia, Thailand and Pakistan are countries that will benefit most from the push, the report said.

Source: http://www.theedgemarkets.com/article/chinas-belt-and-road-lending-set-rise-morgan-stanley-says