KSE index 100 market value is up 10x from 2001 to 2007.
KSE 100 index trading at forward PE of about 15. India is 20, DFM is about 12-14? ADSM probably a little less than DFM.
Deputy managing director of the KSE, Muhammed Yacoob Memon, says a Dubai listing is possible.
CEO of Arif Habib Investments Management Ltd in Karachi, Nasim Beg, prefers New York or London - low volumes in Dubai are an issue. Perhaps he means DIFX?
Now, weren't DFM planning to go shopping with all their IPO money? Maybe that's why a dual listing of the Karachi SE is mentioned - a deal with DFM is in the works eg DFM becomes one of the principal shareholders in the KSE?
Karachi Exchange May Sell Shares in Dubai IPO in 2008
By Amit Prakash
The Karachi Stock Exchange, Pakistan's biggest bourse, may sell shares locally and in Dubai in a dual initial public offering, luring overseas investors to the South Asian market that has risen ten-fold in six years.
Sale arranger Deutsche Bank AG will complete its valuation by June and the IPO could take place within a year, Muhammed Yacoob Memon, deputy managing director of the exchange, said. Memberships changed hands at about 90 million rupees ($1.5 million) in October, valuing the bourse at $300 million.
"There are already discussions on how to get the listing of the company on the Karachi and Dubai stock exchanges,'' Memon said in a March 19 interview in Karachi.
Karachi's KSE 100 index has surged to $52 billion in market value from $5 billion since 2001 as investors shrugged off assassination attempts on President Pervez Musharraf and an insurgency by al-Qaeda militants along the border with Afghanistan. The NYSE Group Inc., operator of the world's largest stock exchange, agreed in January to invest $115 million in neighboring India's biggest bourse.
"We have seen interest from overseas stock exchanges in India and if we get our act together, then I don't see why there won't be interest in the Karachi stock Exchange,'' said Nasim Beg, who oversees the equivalent of $320 million in stocks and bonds as chief executive officer of Arif Habib Investments Management Ltd. in Karachi.
Public Company
The Karachi Stock Exchange plans to demutualize, or convert to a public company from a body owned by its members, by the end of this year as part of a reform program that began in 1997. Under the plan, independent management, automated trading and risk management systems were introduced at the exchange.
The Karachi Stock Exchange 100 index trades at 14.9 times future earnings, compared with India's benchmark Sensitive Index, which is valued at 20 times earnings, according to Bloomberg.
Pakistan's benchmark index has climbed 12.5 percent this year, on course for its sixth consecutive annual rise. Overseas investors bought a net $697 million of Pakistani stocks in the July-January period, compared with $400 million a year earlier, according to central bank data.
"Pakistan has good political and economic relations with the Middle Eastern states, and therefore expects to get a good price in Dubai,'' said Ali Hussain, head of research at Invest Capital & Securities Ltd. in Karachi.
Pakistan is a country where Shiite and Sunni Muslim factions bombed each other in January, and where President Musharraf was forced to deny the government is doing too little to shut down training camps used by al-Qaeda and Taliban fighters in the tribal regions bordering Afghanistan.
Security Risk
The fighting, and assassination attempts on Musharraf and Prime Minister Shaukat Aziz, highlight the security risk in Pakistan, Standard & Poor's said in a report in December.
The valuation of membership is "the most contentious issue'' in the process, Haroon Askari, the exchange's head of operations, said in an interview in Karachi on March 19. "Members have different views on how various assets should be valued.''
Companies from the Middle East, including Emirates Telecom Corp., and Emaar Properties PJSC, accounted for 15 percent of Pakistan's foreign investment in the seven months ended Jan. 31. Overseas investment in shares, from countries like the United Arab Emirates and Kuwait, more than doubled to $981.2 million in the July-to-February period, compared with $470.9 million a year earlier.
The "natural choice'' for an overseas listing would be London or New York, since Dubai's low volumes will not provide "quality price discovery,'' said Beg.
Cash-Settled Futures
The exchange plans to start trading cash-settled futures on April 2 to develop a derivatives market, Memon said. "After getting three or four months of experience, we will start trading index futures and options by the end of the year.''
The bourse will also spend at least 60 million rupees to develop a disaster recovery system this year, Fiyaz Ahmed Longi, the exchange's head of internal audit, said in a March 19 media presentation in Karachi.
"We will then be capable of switching the operation onto a remote site within the next few months,'' he said.
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