Hell hound
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Thanks for such a great and detailed reply as always(be careful with that because you're becoming my go to guy and I will disturb you alot with my future quarries). I agree and knew most of the above mentioned advantages(except the derivatives one I didn't knew about it) and thanks again for clearing it for our other users.A short opinion considering the debate here.
1) First people saying that Pakistan is doing demutualization is bad as this is first country to do it or it is for sale. Stockholm Stock Exchange, Amsterdam Stock Exchange, Borsa Italiana, Australian Stock Exchange, Stock Exchange of Singapore, Toronto Stock Exchange, London Stock Exchange, Euronext, The Nasdaq Stock Market, Tokyo Stock Exchange, Bursa Malaysia, New York Stock Exchange and BOVESPA (Brazil)..All these stock exchanges are demutualized long before. Anyone can identify the name of countries whether they are sold out countries now ?..Check there market capitalization pre and post demutulization and then comment.
2) About the Share Price, no body was able to identify what was the book value and how market value was in term of book value. The SP was 3 times more than the book value that was calculated by a Professional Audit firm ,KPMG not by any tom dick and hairy.. The international average is 3.8 times ..Given the circumstances of Pakistan this is not bad as it is being portrayed.
3) Just to state few advantges it will improve better governance structures, access to economic capital, profit motivation for growth and development, removal of barrier to entry for new brokers (breaking the hegemony of few economic lords in Stock exchange), unlocking of value of membership cards, greater ability to attract listings, domestic and international recognition and ability to make international alliances. PSX can qualify to become a member of the World Federation of Exchanges, which has currently 68 members. This demutualization of the stock exchanges will actually convert the stock exchanges’ structure from nonprofit, mutually-owned organization to for-profit public limited company, owned by shareholders.This will break the hegemony of Broker Mafia
4) You will soon see the launch of derivatives, Index options and ETF(Exchange Traded funds) after demutualization, may be in last quarter of 2017.Those who know derivatives will surely call it as advancement and strength in equity market.
5) It was not only China, Turkish and Landon stock exchanges were also in a bid competition. Further if you compare these 3 markets it was better to go with China considering the capital and growth they have. Little hint count the number of investors in Chinese stock exchanges and then just imagine even if 1 % invest in PSX , thePSX index will be doubled in a year.
There was no doubt about the advantages of demutalization in my mind. my only concern with this sale was increasing Chinese influence and their (unknown) way of governance.I think it would've been better(from only governance and regulation point of view) if UK had bought it.But we also can't dictate the biding process either.anyway lets hope for the best.
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