EFG-Hermes to augment security brokerage and asset management
Since a Chinese consortium acquired 40 percent strategic stake in PSX with a winning bid of Rs.8.96 billion in December 2016, there is more good news for the country’s competitive and increasingly attractive share market. Egypt-based investment bank EFG-Hermes, a leading player in the Middle East and North African region has come to town with great confidence in the potential of the local brokerage industry and ambitious plans to make its presence felt. After the departure or lying dormant of JPMorgan Chase in 2008 when the stock exchange had to be closed temporarily due to cash constraints, this prestigious institution is the maiden foreign brokerage house to set foot in Pakistan. The PSX too welcomed the newcomer in a befitting bullish manner, with its index rising by 600 points in one day to 51,374.
The bank made its grand entree by the simple expedient of acquiring a 51 percent share in the Karachi-based (formerly) Invest and Finance Securities Limited at Rs.15 per share which meant an initial investment of $1.5 million. However, the bank’s CEO was optimistic of injecting a considerable chunk of the total foreign inflows of plus $250 million expected in the current year. With considerable experience and specialisation since 1984 in securities brokerage, asset management, market analysis, investment banking, private equity and research in such high-profile economic hubs as the UAE, Qatar, Kuwait, Saudi Arabia and Oman, EFG-Hermes can have a chain-reaction effect on Pakistan’s brokerage market, with other bigwigs following in its wake.
At this time the market needs stability and investor confidence above all else if it is to retain its place in the Morgan Stanley Capital Index (MSCI) which has upgraded it from Frontier Market to Emerging Market. On the first day of this reclassification on June1, 2017, an investment of $500 million is expected to be netted. Hectic future trading activity will also revolve around the financing of projects relating to the CPEC, and this requires ease of communication of PSX with potential foreign investors by modernising outdated IT systems.