Pakistan, China cross-border investment fund

Pakistan Stock Exchange (PSX) CEO Farrukh H Sabzwari highlighted the Pakistan-China cross-border Exchange-Traded Fund (ETF) initiative as one of the most promising developments in the country's capital market.

"These agreements will enable us to take the next step toward the joint launch of cross-border ETFs," he said, noting that groundwork for the collaboration had already been laid.

Speaking at the International Capital Market Conference (ICMC 2025), held under the theme "Regional Integration and Innovation in Capital Markets," Sabzwari said the initiative will link PSX with Chinese exchanges, allowing investors in both countries to trade selected shares through a single regulated product.

The partnership will open Pakistan's market to more global investors while giving locals easier access to Chinese equities. It allows exposure to foreign firms without overseas accounts and boosts market liquidity and inflows.

Organised by the Securities and Exchange Commission of Pakistan (SECP) in collaboration PSX and other institutions, ICMC 2025 brought together regulators, investors, and financial leaders to discuss regional cooperation, digitisation, and Islamic finance. Delegates from China, Bangladesh, Iran, the US, and Azerbaijan attended in person, while others joined virtually.

Azerbaijan's delegation, including its largest bank ABB (International Bank of Azerbaijan), shared experience in fixed-income and stock markets and highlighted retail participation. Their model for corporate and government bonds was presented as a reference for Pakistan.

Speakers from Hong Kong's Securities and Futures Commission discussed virtual asset governance and fintech oversight, showcasing Hong Kong's regulatory model. Panels on equity and debt markets stressed expanding Global Depository Shares, ETFs, and derivatives to attract investors and deepen liquidity.

A key segment focused on Islamic finance. Dr Irum Saba of IBA's Centre for Excellence in Islamic Finance said Islamic banking should complement conventional finance. She cited Singapore's mosque-based self-financing model and Akhuwat's interest-free microfinance as examples of socially driven systems.

Meezan Bank's Farhanul Haq Usmani called for legislation distinguishing Sukuk and Mudarabah from conventional instruments. Speakers also flagged delays in updating Shariah-compliant company lists, which create uncertainty for ethical investors.

Iran's Shariah Committee Secretary, Dr Majid Pouyanmehr, urged collaboration between SECP and the State Bank to introduce short-term Sukuk and Islamic commercial papers as liquidity tools. Pakistan Mercantile Exchange CEO Khurram Zafar cited Iran's experience with futures and called for updated laws to enable Shariah-compliant instruments.

Iranian scholar Ayatollah Dr Gholamreza Mesbahi Moghaddam said ethical finance is the foundation of sustainable growth. Speakers on Tijarat Sukuk stressed that only tangible assets can back leasing-based Sukuk, advocating Pakistan-Iran cooperation to expand trade-based Islamic bonds.

Arif Habib Dolmen REIT CEO Muhammad Ejaz said REITs could formalise Pakistan's vast informal real estate sector, valued at PKR 100 trillion. He urged policy reforms to make it accessible and tax-efficient.