Australian Treasurer Wayne Swan Friday officially rejected the
proposed merger of the Singapore Exchange (SGX) and the
Australian Securities Exchange (ASX).
SGX said in a statement that under the circumstances, both parties
“have agreed to mutually terminate the merger implementation
agreement entered into on 25 October 2010.”
“As Asia’s most international exchange, we will continue to pursue
organic as well as other strategic growth opportunities, including
further dialogue with ASX on other forms of cooperation,” it added.
In strongly-worded language, Swan said the proposal was not a
merger but “a takeover that would see Australia’s financial sector
become a subsidiary to a competitor in Asia.”
He said Australia’s “economic and regulatory sovereignty over the
ASX would be at risk” if the deal succeeded, adding that “given the
size and nature of the SGX, the opportunities that were offered
under the proposal were clearly not sufficient to justify this loss of
Still, Swan maintained that the Australian government’s longstanding
policy has been to welcome foreign investment.
SGX rose 2.8 per cent to close at S$8.38 on Friday following the
announcement of Australia’s official rejection of the deal.
Speaking to Biz Daily by phone on Friday, Ng Kian Teck, Investment
Analyst at SIAS Research, said: “This rejection is not necessarily
a bad thing because SGX can put its money to better use
such as possible mergers and collaborations with other ASEAN
(Association of Southeast Asian Nations) exchanges.”
According to analysts, Australia’s attitude could result in ASX
falling behind its peers at a time when other exchanges are
Recent cases include the Deutsche Boerse AG-NYSE Euronext
merger and the proposed tie-up between the London Stock
Exchange and TMX Group, operator of the Toronto Stock
Despite Swan’s decision, ASX reiterated in a statement on Friday
its “ongoing belief in the need for ASX participation in regional and
global exchange consolidation.”
“ASX will continue to evaluate strategic growth opportunities,
including further dialogue with SGX on other forms of combination
and cooperation,” the statement added.
Swan’s official rejection confirmed the sentiments of the majority of
readers who were polled by Biz Daily since October 27 last year,
soon after the merger proposal was announced.
When asked whether they thought the proposed SGX-ASX merger
would succeed, 61 per cent of Biz Daily readers who responded
said “No”, while 31 per cent said “Yes”. Only 8 per cent said they