China outbids India for stake in DSE

China outbids India for stake in DSE

Context:

Bangladesh has agreed to sell a large stake in its stock exchange to a Chinese consortium

What has happened?

• The Dhaka Stock Exchange on February 10th had approved the Chinese offer to buy a quarter of the bourse’s 1.8 billion shares
• Bangladesh’s financial regulator has asked it to “further scrutinise” the decision.
• India’s NSE had offered 15 taka ($0.18) per share during the tender process this month.
• China’s Shanghai and Shenzhen stock exchanges made a joint higher bid of 22 taka per share, or $122 million, and offered additional technical support worth nearly $37 million.

The China Factor in Indo-Bangladesh ties

• The intervention by the Bangladesh Securities and Exchange Commission in the sale sparked allegations in local media that it was trying to favour India.
• The competing bids have exposed tensions in Bangladesh as it juggles growing interest from China against long-standing ties with its huge neighbour India.
• In recent years, India has made big investments in Bangladesh and Indian companies have won multi-billion contracts in key sectors
• But increasingly it must counter China, which has also courted India’s arch-rival Pakistan and strategic Indian Ocean nations including Sri Lanka and the Maldives.