The Singapore Stock Exchange (SGX) and the Australian Stock Exchange (ASX) have recently announced a US$8.3bn merger to create the premier international share exchange in Asia Pacific. While talks are underway for the merger to see the combined entity become the world’s fifth-largest stock exchange, PRC capital markets lawyers remain confident of bourses in Greater China.
“The trading volume and activity in Hong Kong and Shanghai is still far greater than those of Australia and Singapore, so I don’t think the potential merger represents a real threat,” said Yang Xusheng, partner at FenXun Partners. “Greater China exchanges still have their edge and will remain poised to seize more market share.”
Yang added that even if the two exchanges do merge, PRC companies will continue to look to Hong Kong and Shanghai in terms of listing. “There isn’t a real benefit for companies to reconsider Australia or Singapore as a listing venue as opposed to Hong Kong or Shanghai. They wouldn’t raise more money and gain more investor interest just because it is a newer and larger entity. PRC companies are now sophisticated enough to realise that,” said Yang.
Since the announcement, the merger has faced some opposition. “Given the regulatory challenges, the merger might not go forth. Australians are opposing the merger, partly because of the economic and regulatory challenges and also that they do not want to be perceived as being acquired by Singapore,” explained Yang.
Nonetheless, a successful merger between the ASX and SGX builds upon a trend of recent consolidation amongst the world’s exchanges. In 2000 OMX unsuccessfully tried to buy the London Stock Exchange. In 2006, the New York Stock Exchange acquired Euronext, while in 2007 the London Stock Exchange acquired Borsa Italiana. And in 2008, NASDAQ and OMX merged. ALB
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