<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>Few suitors for Singapore Exchange
</TR><!-- headline one : end --><TR>One aspirant, TSE, finds that its SGX adventure is turning out to be costly </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Goh Eng Yeow
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The Tokyo Stock Exchange (TSE) accumulated a 4.99 per cent stake in Singapore Exchange last year. It is yet to get MAS clearance to raise its stake to 5 per cent. -- ST PHOTO: FRANCIS ONG
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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->STOCK exchange takeovers are back on the agenda but shareholders in the local bourse should not get their hopes up that Christmas is coming early.
While brief talk of a deal between two of the world's biggest bourses - NYSE Euronext and Deutsche Borse - has revived hopes that more such marriages might be in the pipeline, there are few suitors for the Singapore Exchange (SGX). That did not stop its shares - and those of other bourses around the world - from staging a robust rally recently.
Over the past three weeks, SGX surged 18 per cent while the Hong Kong Exchange was up 48 per cent.
Good news for SGX shareholders - and they need some - but they may have to keep the champagne on ice for a while.
The inability of the Tokyo Stock Exchange (TSE) - SGX's most obvious suitor - to raise its stake to 5 per cent is a cautionary tale on the difficulties involved in taking over a regional bourse operator.
In June last year, the Tokyo bourse accumulated a 4.99 per cent stake of SGX on the open market at a cost of 37.4 billion yen (S$623 million).
It then disclosed its intention to raise its stake to 5 per cent, but it needed clearance from the Monetary Authority of Singapore (MAS) - something that has apparently not been granted.
Mr Masaki Suzuki, TSE's Singapore representative, told The Straits Times in an e-mail message that any further share purchases 'depend on the outcome of discussions between both exchanges'. He did not elaborate on the nature of the discussions.
'TSE will make further announcement when necessary if there are any developments from the discussions,' he said.
But while Tokyo has not been spurned, the SGX adventure has turned out to be costly. In the past 18 months, the Japanese yen has become 25 per cent dearer in Singapore dollar terms, while SGX's share price has halved since TSE made its purchases. That means TSE's SGX stake is now worth $268 million (16.04 billion yen), leaving it sitting on a hefty paper loss of $355 million.
To rub salt into the wound, it cannot average down the costs of its investments by buying more shares at SGX's current depressed price until it gets MAS clearance.
In the meantime, the allure of regional stock exchanges has faded for potential predators with the global credit crunch biting deeply into trading volumes across all financial products.
On the SGX, trading volumes in equities have taken a battering as the bear market tightens its grip. Last month, only 1.23 billion shares worth $1.02 billion were traded daily - less than half of the 2.73 billion shares worth $2.36 billion traded daily last year.
Even derivatives trading, which thrives on volatility, is showing signs of strain.
The total number of futures contracts traded last month fell by 35 per cent to 4.44 million contracts from 6.84 million in October. This is partly due to a sharp drop in the trading of Nikkei futures - the catalyst for the Tokyo bourse's interest in SGX in the first place.
And analysts have been gloomy about SGX's outlook.
A check with Bloomberg shows that 12 of the 19 analysts have a sell or underperform call on the stock. [email protected]
</TR><!-- headline one : end --><TR>One aspirant, TSE, finds that its SGX adventure is turning out to be costly </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Goh Eng Yeow
</TD></TR><!-- show image if available --><TR vAlign=bottom><TD width=330>
</TD><TD width=10>
The Tokyo Stock Exchange (TSE) accumulated a 4.99 per cent stake in Singapore Exchange last year. It is yet to get MAS clearance to raise its stake to 5 per cent. -- ST PHOTO: FRANCIS ONG
</TD></TR></TBODY></TABLE>
<TABLE><TBODY><TR><TD>
</TD></TR></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->STOCK exchange takeovers are back on the agenda but shareholders in the local bourse should not get their hopes up that Christmas is coming early.
While brief talk of a deal between two of the world's biggest bourses - NYSE Euronext and Deutsche Borse - has revived hopes that more such marriages might be in the pipeline, there are few suitors for the Singapore Exchange (SGX). That did not stop its shares - and those of other bourses around the world - from staging a robust rally recently.
Over the past three weeks, SGX surged 18 per cent while the Hong Kong Exchange was up 48 per cent.
Good news for SGX shareholders - and they need some - but they may have to keep the champagne on ice for a while.
The inability of the Tokyo Stock Exchange (TSE) - SGX's most obvious suitor - to raise its stake to 5 per cent is a cautionary tale on the difficulties involved in taking over a regional bourse operator.
In June last year, the Tokyo bourse accumulated a 4.99 per cent stake of SGX on the open market at a cost of 37.4 billion yen (S$623 million).
It then disclosed its intention to raise its stake to 5 per cent, but it needed clearance from the Monetary Authority of Singapore (MAS) - something that has apparently not been granted.
Mr Masaki Suzuki, TSE's Singapore representative, told The Straits Times in an e-mail message that any further share purchases 'depend on the outcome of discussions between both exchanges'. He did not elaborate on the nature of the discussions.
'TSE will make further announcement when necessary if there are any developments from the discussions,' he said.
But while Tokyo has not been spurned, the SGX adventure has turned out to be costly. In the past 18 months, the Japanese yen has become 25 per cent dearer in Singapore dollar terms, while SGX's share price has halved since TSE made its purchases. That means TSE's SGX stake is now worth $268 million (16.04 billion yen), leaving it sitting on a hefty paper loss of $355 million.
To rub salt into the wound, it cannot average down the costs of its investments by buying more shares at SGX's current depressed price until it gets MAS clearance.
In the meantime, the allure of regional stock exchanges has faded for potential predators with the global credit crunch biting deeply into trading volumes across all financial products.
On the SGX, trading volumes in equities have taken a battering as the bear market tightens its grip. Last month, only 1.23 billion shares worth $1.02 billion were traded daily - less than half of the 2.73 billion shares worth $2.36 billion traded daily last year.
Even derivatives trading, which thrives on volatility, is showing signs of strain.
The total number of futures contracts traded last month fell by 35 per cent to 4.44 million contracts from 6.84 million in October. This is partly due to a sharp drop in the trading of Nikkei futures - the catalyst for the Tokyo bourse's interest in SGX in the first place.
And analysts have been gloomy about SGX's outlook.
A check with Bloomberg shows that 12 of the 19 analysts have a sell or underperform call on the stock. [email protected]
