Singapore shall sign East Asian Community Union with China, Taiwan, Hong Kong and Macau or Southeast Asia Union with Brunei, Malaysia and Indonesia?
SYDNEY: Australian Treasurer Wayne Swan officially blocked on Friday the proposed merger of the Australian and Singapore stock exchanges, branding it a takeover that would damage national interests.
"Let's be clear here: this is not a merger. It's a takeover that would see Australia's financial sector become a subsidiary to a competitor in Asia," he said.
"It was a no-brainer that this deal is not in Australia's national interest."
Swan said Australia's "economic and regulatory sovereignty over the ASX would be at risk" if the deal went through, making Australia's bourse a junior partner.
"(This) could only be justified if there were very substantial benefits for our nation, such as greatly enhanced opportunities for Australian businesses and investors to access capital markets.
"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 sovereignty."
The ASX and Singapore Exchange Limited announced plans last October to create one of the world's largest and most diversified financial trading hubs in a AUD$8.4 billion (US$8.7 billion; S$11.06 billion) deal.
But the proposal hit hurdles in Australia, where concerns over foreign ownership and Singapore's democracy and rights record were raised.
Swan's decision was the first time since 2001 that an application has been rejected by the Foreign Investment Review Board and the Treasurer was at pains to make clear that Australia welcomed foreign investment.
"The Australian government's longstanding policy is to welcome foreign investment," he said.
"Such investments are subject to review on a case-by-case basis ... which allows the Treasurer to prohibit a particular acquisition on national interest grounds.
"It is important to emphasise that this occurs very rarely."
Nevertheless, Australia's attitude to the merger could see the ASX fall behind its peers, analysts say, amid a climate of global consolidation among exchanges.
Last week, the Nasdaq and Intercontinental Exchange joined forces to make an US$11.3 billion bid for NYSE Euronext.
The London Stock Exchange has meanwhile proposed merging with the Toronto bourse to create one of the world's biggest trading platforms.
Swan though said the Australian Treasury, the Reserve Bank of Australia, and the Australian Securities and Investments Commission had all raised concerns about regulatory oversight when it came to SGX's takeover bid.
"It is important that we continue to build Australia's standing as a global financial services centre in Asia to take best advantage of the benefits of our superannuation savings system," he said.
"I had strong concerns that the proposed acquisition would be contrary to these objectives. "
In coming to a decision, he said he had to consider the proposal's potential benefits and implications for Australian businesses, investors and the community, and decided they were not enough to green-light the deal.
In particular, he pointed to the SGX being a smaller regional exchange, based on the number of companies listed and the value of those listings, and he was not prepared for the ASX to effectively become "a junior partner".
"At the end of the day this takeover was more about growing Singapore's financial sector than Australia's," he said.
"The deal just doesn't stack up whatever yardstick you use."
-AFP/ls/wk
SYDNEY: Australian Treasurer Wayne Swan officially blocked on Friday the proposed merger of the Australian and Singapore stock exchanges, branding it a takeover that would damage national interests.
"Let's be clear here: this is not a merger. It's a takeover that would see Australia's financial sector become a subsidiary to a competitor in Asia," he said.
"It was a no-brainer that this deal is not in Australia's national interest."
Swan said Australia's "economic and regulatory sovereignty over the ASX would be at risk" if the deal went through, making Australia's bourse a junior partner.
"(This) could only be justified if there were very substantial benefits for our nation, such as greatly enhanced opportunities for Australian businesses and investors to access capital markets.
"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 sovereignty."
The ASX and Singapore Exchange Limited announced plans last October to create one of the world's largest and most diversified financial trading hubs in a AUD$8.4 billion (US$8.7 billion; S$11.06 billion) deal.
But the proposal hit hurdles in Australia, where concerns over foreign ownership and Singapore's democracy and rights record were raised.
Swan's decision was the first time since 2001 that an application has been rejected by the Foreign Investment Review Board and the Treasurer was at pains to make clear that Australia welcomed foreign investment.
"The Australian government's longstanding policy is to welcome foreign investment," he said.
"Such investments are subject to review on a case-by-case basis ... which allows the Treasurer to prohibit a particular acquisition on national interest grounds.
"It is important to emphasise that this occurs very rarely."
Nevertheless, Australia's attitude to the merger could see the ASX fall behind its peers, analysts say, amid a climate of global consolidation among exchanges.
Last week, the Nasdaq and Intercontinental Exchange joined forces to make an US$11.3 billion bid for NYSE Euronext.
The London Stock Exchange has meanwhile proposed merging with the Toronto bourse to create one of the world's biggest trading platforms.
Swan though said the Australian Treasury, the Reserve Bank of Australia, and the Australian Securities and Investments Commission had all raised concerns about regulatory oversight when it came to SGX's takeover bid.
"It is important that we continue to build Australia's standing as a global financial services centre in Asia to take best advantage of the benefits of our superannuation savings system," he said.
"I had strong concerns that the proposed acquisition would be contrary to these objectives. "
In coming to a decision, he said he had to consider the proposal's potential benefits and implications for Australian businesses, investors and the community, and decided they were not enough to green-light the deal.
In particular, he pointed to the SGX being a smaller regional exchange, based on the number of companies listed and the value of those listings, and he was not prepared for the ASX to effectively become "a junior partner".
"At the end of the day this takeover was more about growing Singapore's financial sector than Australia's," he said.
"The deal just doesn't stack up whatever yardstick you use."
-AFP/ls/wk
