China’s largest brokerage house returns to Pakistan after 17 years

Published: August 31, 2018
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CLSA JV Holdings acquires 24.9% stake in Alfalah Securities. PHOTO: AFP

CLSA JV Holdings acquires 24.9% stake in Alfalah Securities. PHOTO: AFP

KARACHI: CLSA JV Holdings Private Limited, China’s biggest brokerage house, announced on Thursday its return to Pakistan after a gap of 17 years with the objective of assisting Chinese strategic investors to acquire new businesses and conduct joint ventures in the country.

It is also aiming to expand the foreign portfolio investors’ base at the Pakistan Stock Exchange (PSX), which was upgraded from the status of a MSCI frontier to the emerging market last year.

The brokerage firm returns to Pakistan’s capital market after acquiring a 24.9% stake in Alfalah Securities, a subsidiary of Bank Alfalah, the sixth largest bank in the country.

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“We are acquiring a 24.9% stake in Alfalah Securities,” CLSA Limited Group Secretary Donald Skinner told The Express Tribune in an interview, adding that the brokerage house is being rebranded as Alfalah CLSA Securities.

He, however, did not disclose the acquisition price, saying they would announce the amount after signing the joint venture agreement later in the day.

He said CLSA is expanding its footprint in countries that are part of China’s Belt and Road Initiative (BRI). Under the BRI, China is investing $60 billion in Pakistan’s infrastructure (roads and railways) and power projects under the banner of the China-Pakistan Economic Corridor (CPEC).

CITIC Securities (CITICS) – China’s largest investment bank and securities firm – acquired CLSA (originally a Hong Kong based firm) in 2013 to secure a platform for their international expansion.

Previously, CLSA opened its office in Karachi, Pakistan, in early 1990s to work at the PSX – then Karachi Stock Exchange – but left the country in 2001.

“We closed the business in 2001 because there was considerable instability in Pakistan,” he recalled, adding it had become very difficult to operate under the then provided business environment.

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CLSA is aimed at providing advice to Chinese companies looking to acquire businesses, set up joint ventures or to understand markets in all Asian countries signed up to the BRI initiative.

It remained a major wholesale broker in BRI countries, including Singapore, Malaysia, Philippines, Indonesia, Thailand, India, and Sri Lanka for the past 30 years.

Skinner said the second objective of coming back to Pakistan is to facilitate foreign investors to invest in Pakistan and to expand foreign portfolio investors’ base here.

“We are aiming to double (our) market share in Pakistan,” he said.

Alfalah Securities CEO Atif Khan, who accompanied Skinner at the interview, added their share in everyday trade volumes at the PSX currently stands at around 4.5%.

When asked why foreign investors have remained net sellers in Pakistan for a few years, he said “investors come and go”.

“We do not invest for the short term. We are a long-term investor,” he said, adding they are not concerned about the Pakistan economy and the global scenario in the wake of the plunge in the Turkish lira.

“We can bring back the international customers’ base to Pakistan with Alfalah having strong knowledge of the market,” Khan remarked.

He said Pakistan has become a well-established name, but its capital market has largely remained underserved. The long-term scenario suggests that “from here it will grow up.”

The PSX’s benchmark KSE-100 Index dropped 0.91%, or 385.92 points, and closed on Thursday at 41,863.52 points, a far cry from the over 50,000 level it was at last year. 

Published in The Express Tribune, August 31st, 2018.

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