The Pakistan Stock Exchange (PSX) is going to launch this month a new trading system acquired from the Shenzhen Stock Exchange (SZSE), the bourse’s chief executive has said.
The SZSE is one of China’s three stock exchanges — along with Shanghai Stock Exchange, and China Financial Futures Exchange — that hold a 40 percent stake in the PSX, reported Arab News.
The PSX signed a $5 million contract with SZSE in November 2019 for the acquisition of Trading and Surveillance System to improve its operational and technological level. It was first scheduled to be implemented in March 2021.
“We expect to launch within the month of October. There were certain requirements that our stakeholders had requested to accommodate in the trading system which now have been implemented,” PSX chief executive Farrukh H Khan told Arab News earlier this week.
The system is expected to make the PSX more transparent and attractive. “The system will vastly improve the capabilities of our trading and abilities to introduce new products like options,” Khan said. “We’ll have a proper surveillance system and the robustness of the much better system.”
The bourse’s benchmark KSE 100 index dropped 25.61 percent in April 2020 and touched the year’s lowest 27,228.80 level. The index recouped some of the losses in later months.
Pakistan’s bourse was declared Asia’s best stock market and the world’s fourth best performing market in 2020 by Market Currents, a New York-based financial markets research firm.
However, last month Morgan Stanley Capital International (MSCI) downgraded PSX from its Emerging Market Index (EMI) to Frontier Markets Index (FMI), following a continuous drop in share prices of its listed companies.
In 2017, benchmark KSE 100 had peaked to 53,000 points level with market capitalization of $100 billion. However, market capitalization has dropped over the years to $45 billion including 17 percent decline in the last four months.
“This (downgrading) was mainly due to the size of the market capitalization which has declined,” Khan said. “Rising oil prices, which doubled in recent days, Afghanistan’s situation, interest rate hike and rupee remained under pressure and MSCI reclassification generally has created negative impacts in the equity market.”
“Pakistan’s stock market has given an average 19 percent return in dollar terms during the last 20 years,” Khan concluded.