Singapore Exchange Rating Cut, ASX Tumbles as Bid is Opposed by Lawmakers.
Singapore Exchange
Australia’s ASX Ltd, shares tumble, down 7.4 percent, after Bob Brown, the leader of the Greens party, said he “will not be facilitating or supporting this takeover.” of the owner of Australia’s stock exchange.
Yesterday, The Singapore Stock Exchange announced it wants to buy the Australian Securities Exchange for USD 7.9 billion ($A8.4 billion). The stock is trading more than 15 percent below Singapore Exchange’s A$46.18 cash-and-share offer on speculation the plan to create the world’s fifth-biggest listed bourse will fail.
The stream of political comments sent ASX shares down as much as 8.6% on Tuesday after Monday’s 19.4% rise. By 0240 GMT, the shares were 5.2% lower at A$ 39.6, 13% below the value of SGX’s offer.
The deal marks the first merger between market operators in the Asia-Pacific and is expected to lead to lower costs for both exchanges. It requires approval from Australian Treasurer Wayne Swan and shareholders.
Political support for the transaction is necessary as Parliament needs to lift ASX’s 15% voting cap for the deal to go through.
The purchase would create the world’s fifth largest stock market and give Australia a much stronger economic foothold in Asia.
New Zealand Stock Exchange, NZX chief executive Mark Weldon says claims a merger of the much larger Singapore and Australian exchanges could endanger it are over-dramatic.
Mean while, Tokyo Stock Exchange Group Inc. said Singapore Exchange Ltd.’s plan to combine with ASX Ltd. of Australia isn’t favorable for the Tokyo bourse, which owns almost 5 percent of its Singapore rival.
“It’s not a good story,” TSE President Atsushi Saito told reporters today in Tokyo. “Our shareholdings will be diluted, with our stake falling to around 3.1 percent. It’s possible we’ll have a loss of hundreds of millions of yen.”
JPMorgan Chase & Co., Credit Suisse Group AG and Deutsche Bank AG. cut their investment ratings on Singapore Exchange, citing regulatory issues, increased debt and ASX’s growth outlook.
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