Time shareholders rap SGX execs?

I am delighted to see the Tokyo Stock Exchane rap the knuckles of the executives of the Singapore Exchange and remind them buying the Australian Exchange isn't a do or die affair.

Rather, given the way SGX's share price has collapsed, the merger is a do-n-die move: do it, especially if SGX raises the bid price, and it's a guaranteed one way ticket to oblivion.

For people like me, who bought into SGX at lowish prices, we would just lose our paper profits.

For the TSE, which are sitting on huge paper losses -- its 5% was bought at $10 per share, if I remember correctly -- it will certainly be worse.

Mayb it's time for SGX shareholders to start a ginger group to the tell the still new SGX CEO that enough is enough?



Feb 22, 2011
Singapore bourse shouldn't raise ASX offer, TSE warns



TOKYO - THE Singapore Exchange should not raise its already generous offer to buy Australian bourse operator ASX because that would bring unnaceptable dilution for its shareholders, said the chief executive of the Tokyo Stock Exchange, which owns a 5 per cent stake in the Singapore bourse.

'The offer now looks big, and we can't be happy with the dilution if it is raised further,' Atsushi Saito said at a regular news briefing at the TSE.

SGX faces pressure to sweeten its US$7.9 billion (S$10 billion) offer for the rival Australian bourse to counter opposition to the deal from politicians and win regulatory approval, which requires an agreement to lift a 15 per cent cap on foreign ownership.

This week SGX agreed to allow ASX to have an equal number of directors in the merged company in an attempt to counter calls for the merger to be scrapped. Yet, under the agreement SGX will still own a 64 per cent share after the merger.

Giving ground on that ratio risks turning some shareholders such as the TSE, which up to now supported the union, into opponents of the merger, which if strong enough could scuttle the first major bid at consolidation by major Asia-Pacific exchanges.

That could leave Asia lagging as bourses in Europe and the United States move ahead with new alliances and mergers. -- REUTERS

It's a baaaaad thing: SGX offer for ASX

as Suze Orman, internationally acclaimed personal finance expert, will say.


And I will echo her and more.

Imagine, the Singapore Exchange is going into $4.5 billion worth of debt ( the sum total of what it earned in the past decade since its listing doesn’t amount to anything like this!) and also issuing the equivalent of 60% of its share capital base to buy into an exchange that’s about to lose its monopoly!

Chi-X Global Inc. is expected to gain clearance to form a rival exchange in Australia possibly as early as the first quarter of 2011. That will create a competitor that is likely to eat away at ASX’s trading volumes.

SGX’s takeover attempt reflects a company that has lost its way and is grabbing at seaweed to remain relevant.

And this is what happens when the stock market senses SGX’s panic in the dowry it wants to give to its dowdy Down Under bride.

Players savaged SGX shares today when they resumed trading after the official announcement of the takeover. Down 6% in one day!

With such a huge debt — which needs to be serviced – how is SGX going to continue with its generous dividend payout? Especially when it has 60% more shares to service?

Add that to the huge overhang that materialises when suddenly there are so many more SGX shares available to the market.

And the mauling might well continue unless, unless a rival bidder arrives.

And of cos, that recovery will depend on whether the new bidder will go for the hand of ASX or SGX!

If the former, SGX would be left truly out in the cold, after having served as the agent provocateur in winkling out the bid. And the bidder could well be the Hongkong Stock Exchange – even though today its spokesman Henry Law said:

“HKEx will not pursue alliances, partnerships or other relationships purely for investment gains. HKEx will consider selected opportunities in the areas where it can enhance its capability and strengths in technology, business and services.”

But it is early days yet. And there could be many a slip betwixt the cup and Mr Magnus Bocker’s lips. He could have biten off more than he can chew!

Make it 24/7 lah, SGX

Like it or not, I think the Singapore Exchange will be extending its trading hours, sooner or later. This despite the fuss remisiers and some market players are making in response to a reported mass dialgoue between SGX and its stakeholders earlier this month concerning the scrapping of the current lunch break, to make it one continuous session from opening to close.

I say go for it, SGX, no matter what the remisiers n like-minded but parochial thinking people say.

After all, didn't all sorts of dire nay-saying abound when the SGX predecessors decided to reopen the stock market on the 3rd day of Chinese New Year (in line with all other businesses), when it was the tradition for brokers to go back only on the fourth day? And despite all the gloom and doom, our stock market has gone from strength to strength since then.

In fact, why stop at scrapping the lunch break? SGX, under the new CEO, should be bolder. Why not make it 24/7 trading? That way anyone in the world can take a punt on the SGX in their own time zone. Also, no need to trouble the tradition-bound remisiers.

Since our SGX system is an order driven, order matching system and since any investor can trade on SGX via the Internet, I don’t see why the system shouldn’t be used to the max, instead of closing down for week-ends and the better part of every day. This is especially since SGX is going to invest another $250m to supe up the system even more…

As for the k-p-k-b behaviour, these grousers should note that since Jan 11, SGX has already extended its derivatives trading hours till 1am Singapore time the following day for contracts with T-plus-one sessions to accommodate growing international demand for Asian equity derivatives.

The longer trading hours enable traders to respond to market movements and manage their risks across global time zones, including after the close of European equity markets.


Contracts which enjoy the extended trading hours include the Nikkei 225, MSCI Taiwan, MSCI Singapore and S&P CNX Nifty (India) index futures.

With longer, if not 24/7, trading hours, volume is bound to rise, though by how much no one can say till it is put to the test. Also, vloume would depend on what products are available on SGX equities platform.
Asian exchanges, including Sout Korea and Taiwan, that have dropped their lunch-time trading breaks have seen daily volumes rise between 8 per cent and 15 per cent, observers say.

Critics of extended trading hours point to China and Hongkong which have shorter trading hours than Singapore but are among markets in the region enjoying the highest volumes.

Such critics however overlook the fact that China and Hongkong have a far larger critical mass of investors than most of the markets in the region. And markets that have longer hours and desirable products will take nibbles from markets with the critical mass but shorter trading hours. Geddit?

Capricorn effect? BS!

January has come and gone and we are mid-way through February. If any of the old stock market sages had been hoping for the Capricorn effect to save their over-optimistic forecasts from being exposed, they must be sorely disappointed.

January was a bad month for most stock markets, although "bad" is a relative word, because bad depends on when you got in. Because given the volatility, everyone and his aunt are trading for beer and pocket money. There have been some lucky souls who managed to make enough to have a few rounds of yusheng.

So if the Capricorn effect has gone with the wind, what about a pre-Chinese New Year rally? Again, it was more hope than reality, especially this year. Especially with China -- the fount of Chinese New Years -- deciding to tighten lending and then to turn on the screws some more just before the arrival of the Tiger.

Shall we then wait for the Chinese New Year rally when SGX reopens on Wednesday, Feb17? Will the Tiger come bounding in and chase out the dozy Bull which, where stock markets were concerned, was really more a sick cow than a bull..

I shan't hold my breath.

Still in the best tradition of sooth-sayers, I shall say SGX will have its ups and downs this year, and know that I can never be wrong :-D