KARACHI: China Financial Futures Exchange Director You Hang said on Tuesday investors will soon have the opportunity to invest in a Pakistan exchange-traded fund (ETF) in China.

An ETF is a derivative product that represents a basket of underlying assets, such as stocks. It is traded on a stock exchange just like an ordinary share.

Speaking at the second Mergers and Acquisitions Conference organised by TerraBiz, Mr You said Chinese shareholders in the PSX want to introduce derivative products in the national equity market.

“Not only do we want to bring ETFs here in Pakistan, we also want to introduce Pakistan ETF into the Chinese market,” he said, adding that few futures products are currently available on the PSX.

China Financial Futures Exchange is part of the consortium that recently acquired a 40 per cent stake in the PSX.

Mr You acknowledged that the IT system of the PSX requires an immediate revamp. “Several incidents happened in the past few months. There are issues,” he said. Trading remained suspended on Oct 25 for one hour and 20 minutes due to a “technical fault”. In addition, brokers have been complaining about frequent “data leakages” that compromise transparency and give undue advantage to a few players.

Mr You said the importance of the PSX in the wake of the China-Pakistan Economic Corridor (CPEC) has increased as a major avenue for raising money for development projects.

“The CPEC is a huge opportunity for the PSX. A lot of Chinese firms are working here. They are trying to find ways to raise funds,” he said, urging firms to generate capital through the stock exchange instead of bank borrowing.

Published in Dawn, November 29th, 2017