Are Asian Capital Markets Coming Together or Falling Apart?

HONG KONG - September 22, 2011 - The head of the Singapore Stock Exchange (SGX) says they are focusing on organic growth in southeast Asia, following the failed acquisition of the Australian Stock Exchange in April, rejected by the Australian government as going against national interest. Speaking at the Asia Society Hong Kong Center, Magnus Böcker, CEO of SGX noted, “We all knew that politically, it is a difficult situation in Australia. We did know what we were getting into. SGX is not sitting on a lot of money looking for the next deal. We are back to ‘Plan A’ – to focus on organic growth in southeast Asia.”

Also speaking as part of the KPMG-Asia Society Asian Economic Integration Series, Charles Li, the CEO of Hong Kong Exchanges and Clearing (HKEx) re-affirmed that that he was not looking for a merger or acquisition with any other bourse. “We are the largest exchange in the world in terms of market capitalization. If you have growth that can be achieved without going across borders or oceans, we should do. We do not rule out potential alliances on product capabilities or IT platforms, but we are certainly not looking for equity-based transactions simply because we have much more superior structural opportunities to grow.”

Madhu Kannan, CEO of the Bombay Stock Exchange, the oldest in the region, spoke about the possibility of a public-listing. “On going public, a committee was formed by the regulator to look at these issues. There were some ‘interesting’ recommendations including that we can’t go public in the next five years and that there should be a cap on profits. It is now in the hands of the regulators and they’ll articulate some policy.”

He added, “We’d like to go public but the regulatory framework right now is not announced. Once that is announced and after consultation with stakeholders, we’ll look to go public at a reasonable time.”

With the largest number of companies listed on its exchange in Asia, Kannan said they would continue looking inward for expansion, “We see humungous opportunities domestically. There is opportunity for us within the country as India grows. The opportunities for us are so big, that it’s more optimal for us to focus domestically.”
HKEx had a bumper year in 2010, with record IPO listings valued at more than US$110 billion. “We have become very big, very successful in primary listings. That’s our ‘Chapter 1’. But we are not only that. We are now entering ‘Chapter 2’, and that is to bring Chinese investors here which in turn will bring the big issuers here.”

Still, Böcker is confident that SGX plays a pivotal role. “We are very much the Asian gateway. We cater to companies reaching to Asia – China, Japan Southeast Asia, India – Singapore is a natural hub for that. For China, companies go to Charles. For India they go to Maddhu. But for a foot in all these places, Singapore is a good place.”