China, Pakistan eye deeper capital market cooperation after landmark IPO

The successful listing of a Sino-Pakistani tire manufacturer on Pakistan's stock market may have paved the way for broader capital market cooperation between China and Pakistan, including more fundraising by Chinese-invested enterprises and potential cross-border investment products, a senior Chinese exchange executive said.

You Hang, executive vice-president of the China Financial Futures Exchange and Chinese shareholder director of the Pakistan Stock Exchange, said in an exclusive interview with China Daily that the CFFEX will continue expanding its pipeline of qualified Chinese-invested companies in Pakistan seeking equity and debt financing through local capital markets.

Beyond corporate listings, You said CFFEX and PSX will explore broader product cooperation. Subject to regulatory approval, the two sides may study the feasibility of cross-border exchange-traded fund or ETF products and examine potential operational, regulatory, and technical arrangements for future market connectivity.

The remarks came days after Service Long March Tyres Ltd — a joint venture between Pakistan's Servis Group and China's Chaoyang Long March Tyre Co Ltd — became what market participants describe as the first Chinese-invested company to list on the PSX.

The company raised 7.77 billion Pakistani rupees (about $28 million), making it the largest private-sector IPO in Pakistan's history. Proceeds will be used mainly to build a new passenger-car radial tire plant in Pakistan.

The project, expected to begin operations in 2028, will expand local manufacturing capacity, reduce import dependence, and support exports, thus helping Pakistan address the challenges of tight foreign exchange reserves and an imbalance in international payments, You said.

As of mid-day on June 18, shares of SLM traded at 25.6 rupees, nearly 30 percent above the IPO price of 19.95 rupees, reflecting strong investor demand, according to the PSX website. Experts said such market recognition suggests that capital market cooperation between the two countries is gradually evolving from individual projects toward a more institutionalized framework.

"By raising funds through Pakistan's domestic capital market, it has created a market-oriented and sustainable development model that combines Chinese technology, bilateral industrial capacity cooperation, and local capital," he said.

Building on the listing of SLM, the CFFEX will proactively promote more high-quality corridor projects to list on the PSX, You said, planning to conduct regular research visits to Chinese enterprises operating in Pakistan and identify financing needs in sectors such as energy, manufacturing, and infrastructure.

The listing also highlights a decade-long partnership between the two exchanges. In 2017, a Chinese-led consortium — including the CFFEX, the Shanghai Stock Exchange, and the Shenzhen Stock Exchange — acquired a strategic stake in the PSX, becoming its largest single shareholder.

CFFEX has worked with the Pakistani bourse on initiatives ranging from technology upgrades and governance reforms to ETF development and corporate listings, with SLM the first flagship industrial IPO completed under the cooperation framework.

You said further cooperation would also cover market infrastructure and product development. Building on the launch of ETF products in Pakistan, CFFEX will continue supporting efforts to broaden the range of investment products available to local investors, including assisting PSX in preparing for the potential introduction of equity-index and single-stock futures, and exploring Islamic finance products.