China and India vie for bourses

dhaka — The push for geopolitical influence in Asia is expanding from hard infrastructure to financial assets, with a Chinese bourse outbidding an India rival for Bangladesh’s main stock exchange.

The Shenzhen Stock Exchange offered more money for a 25 per cent stake in the Dhaka Stock Exchange, but also sweetened its bid with nearly $40 million worth of technical assistance, according to documents seen by Bloomberg News. It follows a successful 2016 bid from a Chinese consortium that included the Shenzhen and Shanghai stock exchanges that purchased 40 per cent of the Pakistan Stock Exchange.

India’s main bourse, the National Stock Exchange, bid a lower amount for the Dhaka bourse and also wanted to negotiate additional services in separate agreements, according to the documents.

The Chinese offer, currently awaiting final approval from the Bangladesh regulator, is part of the broader contest between Beijing and New Delhi in the region’s smaller countries, from Nepal to Myanmar. Beijing had already invested heavily in the region’s hard infrastructure. But as China seeks closer economic ties as part of its Belt and Road Initiative — a vast

China is implementing a long-term strategy of quiet encirclement of all potential rivals in Asia Husain Haqqani, South and Central Asia director at Hudson Institute

network of ports, railways, roads and infrastructure — its stateowned bourses have also been investing in foreign exchanges.

“China is implementing a longterm strategy of quiet encirclement of all potential rivals in Asia,” said Husain Haqqani, South and Central Asia director at the Hudson Institute in Washington, and Pakistan’s former ambassador to the US. “That strategy includes seeking economic pre-eminence in South Asian countries and the bids for bourses is part of that plan,” he added.

The Shenzhen bid was roughly $120 million, compared to NSE’s $82 million. But the Chinese deal also offered to help Dhaka with training, technical assistance, technological upgrades and secondments. The Chinese would also help the exchange diversify into bonds, asset-backed securities and derivatives, while offering seminars on regulatory issues.

Separately, Bangladesh Prime Minister Sheikh Hasina told Indian journalists on February 20 that their nation shouldn’t worry about Chinese investment in her country. “We want investment and cooperation from whoever offers it,” she said according to the Press Trust of India.

The Dhaka bourse bid was not China’s first. Along with its 40 per cent stake in the Pakistan Stock Exchange, the Shenzhen Stock Exchange has also held talks about investing in the Philippine Stock Exchange, Ramon Monzon, the latter’s chief executive officer, said in October.

“The stock exchanges in China are all state-owned,” said Hu Xingdou, an economics professor at the Beijing Institute of Technology. “They represent the growing financial power of China, and this potential acquisition shows the mounting financial influence of China on Belt and Road countries.” — Bloomberg