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ASX Rejection of SGX Tie-Up Was Wrong Decision: Strategist

CNBC.com
Friday, 8 Apr 2011 | 12:47 AM ET

Australian Stock Exchange's (ASX) rebuff of a $7.8 takeover offer from the Singapore Exchange (SGX) was the wrong decision, said Kerry Series, Founder and Chief Investment Officer of Asia-focused fund management firm Eight Investment Partners.

Exchange Consolidaton
Kerry Series, founder & CIO of Eight Investment Partners explains why the ASX rejection of the SGX deal was the wrong decision.

Kerry warned that the ASX "could be in danger of being left behind in this global consolidation", referring to the recent spate of exchange takeover bids worldwide. TheNYSE Euronext is currently the target of competing bidsfrom the Nasdaq and Deutsche Boerse, while the London Stock Exchange and Canada’s TMX are proposing a $3.2 billion merger.

Canberra formally rejected the bid on Friday, citing concerns over control of key financial systems being handed to a foreign company. The move prompted theSGX to terminate the offer.

"It is in the best interest of Australia for it to happen," Series said, referring to the lapsed takeover bid, and said a tie-up of some form down the road was "inevitable".

"It has to happen; and is, in fact, a benefit to the respective economies because it reduces your cost of investing," he explained, adding that it would be beneficial to ASX shareholders "who would receive valuation premium for their shares."

Despite the deal being dead now, Series has no doubt exchange mergers will continue.
"It will occur in this region as part of the global trend," he concluded.