Shenzhen, Shanghai bourses to become strategic partners of Dhaka Stock Exchange

The Dhaka Stock Exchange is set to have two of the three stock exchanges of China as its strategic partners, with the related people hoping that it will open the doors to many possibilities.

Bangladesh’s premier bourse picked up a consortium of Shenzhen Stock Exchange and Shanghai Stock Exchange on Tuesday, a DSE director confirmed to bdnews24.com.

The Chinese consortium has proposed buying 25 percent stakes into the DSE for Tk 9.9 billion at Tk 22 per share.

In its proposal, the consortium has also mentioned it will spend over Tk 3 billion to give the DSE a technological upgrade.

The Chinese consortium and another of companies of India, Bangladesh and the US submitted their proposals when the DSE floated tenders for strategic partners three months ago.

The DSE board of directors opened the proposals in a meeting on Tuesday and ‘found the Chinese one more attractive’, one of the directors told bdnews24.com.

He requested anonymity as he was not authorised to speak over the issue to the media now.

“The consortium of Shanghai and Shenzhen stock exchanges has been chosen from the two consortiums that submitted proposals, considering capabilities, competitive bids and everything,” he told bdnews24.com 

The director also said the DSE board will sit on Feb 15 again and give the green light to the Chinese consortium’s proposal.

The proposal will be forwarded to the Bangladesh Securities and Exchange Commission then, he added.

After becoming the strategic partner of the DSE, the Chinese consortium will put its representative on the DSE board, according to the director.

“The DSE will be transformed then,” he added.

Shanghai and Shenzhen stock exchanges are among the top bourses in the world boasting $3.5 trillion and $2.2 trillion market capital, respectively.

The market capital of the DSE is over Tk 4.28 trillion or $51.42 billion.

Former DSE President Ahasanul Islam Titu thinks it will be a ‘watershed moment in the history of Bangladesh’s capital market’ once the two Chinese exchanges become partners of the DSE.   

“These two stock exchanges are huge in size. Local and foreign companies get enlisted on them and big global investors trade there,” he told bdnews24.com.

He said both foreign and local investors will have more confidenin the DSE when the Shanghai and Shenzhen exchanges will be in a strategic tie-up with the Dhaka bourse.

“Enlistment of foreign companies will also rise,” he added.

In Ahasanul's view, having them as strategic partners would help Bangladesh diversify products of its capital market.

According to the 2013 demutualisation scheme, 25 percent of the 1.8 billion shares of the Dhaka Stock Exchange Limited will be sold to strategic partners, 35 percent to small investors while 40 percent will be with the Trading Right Entitlement Certificate or TREC holders.  

The DSE wants to include strategic partners in it in order to get advanced technological facilities, and consultancy services for management and business development.

The members of the other consortium that took part in the bidding are India’s National Stock Exchange, Frontier Bangladesh and Nasdaq stock market of the US. 

A DSE official, requesting anonymity, said this consortium offered Tk 15 per share to buy 25.1 percent stake of the DSE.

It also said it would provide technological help, but did not specify the fund it planned to commit to that end.

“Naturally, their proposal failed to impress us,” the official said.

The DSE had floated tender for strategic partners in the past as well, but it was cancelled as the bourse considered the proposals by the local and foreign firms as unacceptable.