China pips India in battle for stake in Dakha Stock Exchange

Dhaka Stock ExchangeThis week’s announcement from Bangladesh that it had rejected a bid for a 25% stake in the Dhaka Stock Exchange (DSE) from India’s National Stock Exchange (NSE) in favour of a higher offer from a consortium of the Shanghai and Shenzhen Stock exchanges, has fuelled anxiety over China’s ‘soft power’ ambitions in south Asia. Although at $2.6bn the consortium’s valuation was nearly 50% higher than the NSE’s, the Indian company is lobbying the Securities and Exchange Commission to overturn the deal, arguing that China wants to use the investment to further its growing political power in the region.
The sale of the stake in DSE comes less than two years after the same two Chinese bourses bought a 40% stake in the Pakistan Stock Exchange. Between them they now have a compared market capital of $6.7 trn compared to the NSE’s $1.41trn without the DSE stake, whose market cap is over $51.42 billion.
“India is trying to create a ringfence against Chinese aggression,” a source privy to the talks between the Indian NSE and the Bangladeshi Securities and Exchange Commission told the FT. “Nepal and Myanmar have already gone, and if China wins this bid, it will be one step closer to dominating south Asia.”
Bangladesh garment factoryThe Bangladeshi economy is growing at about 7% per annum, fuelled in part by growth in its garment exports, and shares in the benchmark DSEX index have risen roughly 8% in the past 12 months. The DSE’s share sale is part of a process of demutualisation aimed at attracting the foreign investment it requires for the technical and technological modernisation of the exchange.

Source: indiatimes