Karachi, January 8

Pakistan’s benchmark Karachi Stock Exchange (KSE) will become the Pakistan Stock Exchange (PSX) next week after merging with two other bourses to become the single share trading entity in the country, officials said today. The merger of Karachi, Lahore and Islamabad Stock Exchanges into PSX could pave the way for more foreign investor interest, observers said.

“All the three stock exchanges are being merged into a single national stock exchange from Monday,” LSE Chief Aftab Chaudhry told AFP.

“The merger will help in selling the exchange to a strategic buyer as part of the demutualisation plan,” said Mohammad Sohail, chief of Topline Securities, a Karachi-based investment house.

Under the plan, PSX would become a listed firm on the exchange with 40 per cent of its shares offered to foreign buyers — 20 per cent in an initial public offering and remaining 40 per cent to listed brokers.

Foreign investors can already trade on the existing exchanges, but the new bourse would be better organised with greater international links, observers said.

“The new buyer would be likely to introduce new derivatives and would facilitate new listings, providing much needed depth and breadth in the market,” Sohail said.

KSE was set up in 1947 with only five listed firms and market capitalisation of 37 million Pakistani rupees ($37 million as per exchange rates at the time). It now has 572 firms listed with total value of 6,958 billion Pakistani rupees ($66 billion).