Singapore Exchange (SGX)

[Drizzt]

d.o.g. i agree with what you said. the grouping of the dividends announcement or financial results is also ridiculous.

i think SGX is an example of profit maximising company without competition.

[d.o.g.]

the grouping of the dividends announcement or financial results is also ridiculous

Yes! Corporate actions (dividends, rights, splits etc) are another big issue. We used to be able to group by the names of the companies, so you click on A and you get all the upcoming dividends from companies like Ascendas, Addvalue, Asiatravel etc.

Now for some reason this grouping is missing. So it's much harder as you have to do it one company at a time. Another example of user-hostile programming. If this is "progress" I don't want it.

[Drizzt]

i think what we were hoping for is some comprehensive database of data like Valueline in US. hey man if you want me to pay to get access to it i also dun mind but its not progressive enough.

I think the greatest problem for them is an investment in a system like this. i think its a SAP system and its hard to replace. SAP if you guys use before is a ERP system that is very workflow driven but its clumbersome at best and really thats why shareinvestor thrives because of the way it presents the data.

[ag88]

repost from CNA forum:
http://forum.channelnewsasia.com/viewtopic.php?t=380623

as at 30/9/2010, their cash is only approx S$750mil.

To obtain the cash, I expect a rights issue? or something similar.

rights issue oso cannot get so much $, so where to get the $?

http://www.bloomberg.com/news/2010-10-24...r-asx.html

Australia's stock market is worth about $1.36 trillion, compared with Singapore's $558.2 billion, according to data compiled by Bloomberg. Even so, Singapore Exchange is the larger company, with a market value of about $7.86 billion, compared with ASX's $6 billion.

machiam SGX so small fry 7.8 bil mkt cap wan to offer 8.2 bil, more than the total mkt cap of SGX

[Musicwhiz]

Oct 25, 2010
SGX 'to offer $10.7b cash, stock for Aussie exchange'
Sources say it will pay A$48 per share, a 37% premium over last price

THE Singapore Exchange (SGX) plans to offer about A$8.4 billion (S$10.7 billion) in cash and stock to buy ASX, which runs the Australian stock exchange, said two people familiar with the matter.

The operator of Singapore's exchange will bid A$48 per ASX share and pay 55 per cent of the deal in stock and the remainder in cash, said the people, who asked not to be identified before an announcement scheduled for today.

ASX shareholders will receive A$22 cash for each share they hold, they said.

The combination would be the first between two exchange companies in the Asia-Pacific region and will create the area's first pan-regional stock exchange.

The takeover would bolster the global competitiveness of the Singaporean and Australian bourses by lowering costs, allowing new products and increasing the scale of their operations, one of the two familiar with the deal said.

After the transaction, the new holding company's shares will be primarily listed in Singapore, with its depository receipts listed in Australia, the two said. Investors will receive 31/2 SGX shares for each ASX share, one of them said.

The Australian newspaper last week reported that SGX chief executive Magnus Bocker was to take on the role of chief executive officer in the merged company.

The chairman would also come from SGX, while ASX chairman David Gonski will become deputy chairman. Outgoing Singapore Airlines chief executive Chew Choon Seng will succeed Mr J.Y. Pillay as SGX chairman in December.

The offer price represents about a 37 per cent premium to the last closing price of ASX in Sydney. Trading in shares of both companies was halted last Friday. ASX spokesman Matthew Gibbs and SGX spokesman Magdalyn Liew declined to comment.

'Singapore, keen to establish itself as the financial centre of Asia, needs to attract liquidity to its stock exchange,' said Mr Will Rhode, an analyst at TABB Group, a Massachusetts-based financial research and advisory firm focused on capital markets. 'Just 27 firms trade more than US$10 million (S$13 million) per day on the Singapore Exchange, compared to 300 names in Tokyo. The acquisition of ASX would be a solution to that woe,' he said.

Competition in the region is increasing. Chi-X Global, an electronic trading platform, has won preliminary approval to become a competitor to ASX and is working towards starting Australian operations by March.

SGX and Chi-X Global, part owner of Europe's largest alternative trading system, agreed last August to start the first exchange-backed dark pool in Asia.

Singapore Commodities Exchange, a unit of SGX, faces competition from the Singapore Mercantile Exchange (SMX), which started operating in Singapore in August. SMX is backed by Financial Technologies (India), which operates the largest commodity exchange in India.

The Australian and Singapore exchanges, whose operators have a combined market value of about US$13.9 billion, are the Asia-Pacific region's fifth- and eighth- largest stock markets respectively.

BLOOMBERG

[Musicwhiz]

Business Times - 26 Oct 2010

SGX puts $10.7b ring on ASX finger

Some hurdles remain, but SGX is proposing to pay A$22 and 3.473 new shares for each ASX share

By JAMIE LEE

(SINGAPORE) The Singapore Exchange (SGX) has mounted a S$10.7 billion takeover for Australia's ASX - in what could be Singapore's largest M&A deal and create the world's fifth-largest exchange.

The merger, announced yesterday, hinges on the blessings from the regulators of Singapore and Australia, though the two exchanges have hinted that the regulators are expected to give the go-ahead.

And while the takeover will bring a much larger exchange, cross-listing opportunities and revenue synergies remain unclear.

The whirlwind romance, sealed over the weekend after a few weeks of negotiations, has SGX proposing to pay a combination of A$22 and 3.473 new SGX shares for each ASX share. This translates to A$48 per ASX share and represents a premium of 37.3 per cent to the last traded price of ASX shares on Friday at A$34.96.

The SGX shares alone are worth S$5.8 billion, based on the last traded price of S$9.54 on Friday.

The stock has surged about 20 per cent over the last three months, riding on the hype of new products and amid better market sentiment, hitting a year-high of S$10.26 this month.

In reaction to the merger news yesterday, shares of SGX slumped 6.18 per cent to finish at S$8.95, while shares of ASX jumped 6.79 per cent to a year's high of A$41.75.

The deal would be financed mostly through a bridging loan of about S$3.5 billion, and S$512 million sitting in SGX's coffers. This would create a net gearing of about 44.9 per cent from its position of zero debt, SGX said in its statement.

It would not be raising money through a placement or rights issue but would cut its dividend payout ratio to a minimum of 70 per cent from 80 per cent.

Speaking to reporters from Australia, SGX CEO Magnus Bocker said the takeover would create scale that can attract more listings and widen its suite of product offerings in the derivatives space.

Both companies have 2,739 listings between them - beating Japan to take pole position in Asia-Pacific's real estate investment trusts market - and will be top in the region's derivatives market.

'There will be more competition for IPOs in the years to come. If we can combine the two companies, we will be a stronger IPO candidate for many of the companies that choose not to come to our market today,' Mr Bocker, who will lead the merged group, told a video conference.

Hong Kong - the world's largest exchange - has outshone most exchanges this year, ushering in a stream of multinational companies as businesses hold a natural bias for the deeper liquidity in Hong Kong.

Its market value now stands at HK$196 billion (S$32.6 billion), compared with the merged group's market value of about S$19 billion. The combined entity will exist under a holding company, which will be listed in Singapore and Australia, though ASX and SGX will stay separate as legal and locally regulated firms.

The holding group, known as ASX-SGX, will have incoming SGX chairman Chew Choon Seng as the non-executive chairman, with David Gonski, now the chairman of ASX, as deputy chairman. Out of the 15 directors, four will come from ASX.

Responding to numerous questions on the national interest of ASX, CEO Robert Elstone said the government has to consider if the national interest was best served by an exchange 'confined to the Australian franchise', or one that had international presence.

'There've been informal confidential discussions,' said Mr Elstone, when asked if the regulators have agreed to the takeover.

'If they had been negative in connotation, Magnus and I wouldn't be sitting here today.'

SGX needs permission to buy more than 15 per cent of ASX shares - the cap under Australian rules.

The Monetary Authority of Singapore has been informed of the proposal and would be studying its details, said a spokeswoman.

The Australian Securities and Investments Commission said it could not comment by press time, though Australian Competition and Consumer Commission chief Graeme Samuel told Australian media yesterday that he did not see the takeover 'raising competition issues for us'.

Quizzed about cross-listing opportunities and direct cost benefits, Mr Bocker said it was 'too early to define how and when', but noted that earnings per share could be bumped up by more than 20 per cent.

And when asked why SGX chose to merge instead of taking a stake - as Tokyo Stock Exchange (TSE) did with SGX - SGX's Mr Gan said a stake would only give it 'a foot in the door'. TSE has a 4.9 per cent stake in SGX, which would be diluted to about 3.2 per cent.

In a client note, Nomura said that 'the deal was 'richly priced', given that there were no obvious revenue synergies.

'Singapore fling?' questioned CLSA in a report, saying that a full merger would be a major management distraction for SGX.

'ASX is a domestically-orientated exchange that offers no strategic advantage to SGX in its Asian growth plans,' it added.

The takeover is expected to be completed by the second quarter of 2011.

Business Times - 26 Oct 2010

COMMENTARY
Yes, it's a big deal, but is it the right deal?

By WONG WEI KONG

ONCE in a while, a new CEO comes along, takes a company out of its comfort zone, and makes things happen.

And so yesterday, Magnus Bocker, just 10 months on the job, announced the Singapore Exchange's arrival on the big stage in a bold move that will define the success - or failure - of his term as CEO.

SGX's S$10.7 billion, or A$8.4 billion, stock and cash bid for ASX Ltd (ASX), the Australian stock exchange, will create the world's fifth largest listed exchange group. It comes after a decade of limited tie-ups and pacts with regional exchanges that have yielded little, including a promising trading pact with Bursa Malaysia which died even before it was born. To escape the constraints of a small market, the SGX set itself up to be a magnet for Chinese IPOs, but it drew mostly small listings and was hurt by a slew of corporate governance failures by S-chips. SGX, however, did achieve a high degree of success in developing the derivatives market.

The proposed merger with ASX is far more ambitious. It is pitched as a transformational deal, but both SGX and ASX face a tough sell. First, there is the Australian reaction to reckon with. At the press briefing announcing the deal, questions from the Australian media took on a decidely nationalistic tone, despite the generous premium offered for the ASX. Whether the issue becomes politicised is something to be watched, given that Australian government and regulatory approvals, as well as that of ASX shareholders, are required. In the deal's favour, however, is the fact that the Australian authorities have been open-minded to competition, and had moved just months earlier to undercut the once dominant position of the ASX.

Premium poser

The hardest sell, however, could be to SGX shareholders. SGX shares dived 6.2 per cent to S$8.95 on the news, after tumbling earlier last Friday when word started to spread that a deal was on. The immediate concern is whether SGX is paying too stiff a price for ASX. SGX is offering a premium of 37.3 per cent to the last traded price of ASX shares on Oct 22, 2010, and a premium of 47 per cent and 45.2 per cent to the three and six-month volume-weighted average price of ASX, respectively. In comparison, when Nasdaq announced in 2007 a US$3.7 billion bid for Nordic exchange OMX - a deal Mr Bocker would be familiar with - the premium offered was roughly 19 per cent to OMX's then closing price.

There are other concerns. Analysts are now trying to put a finger on the interest burden that SGX will be shouldering as it turns to the banks to fund the merger, having ruled out an equity raising. And dividends will suffer too, with the dividend payout ratio set to fall to 70 per cent from the 80 per cent that shareholders have been used to.

Do the potential benefits outweigh these concerns, and the big premium SGX is paying? SGX is promising US$30 million in cost savings annually, as well as earnings per share accretion of approximately 20 per cent, based on FY2010 pro forma financial results, and before taking into account estimated cost synergies. There is also, of course, the promise of scale, and the growth that may secure. But while SGX will certainly grow bigger, the merger with ASX may still not address the question of Hong Kong's ability to draw the biggest listings because of its proximity to China.

The SGX and ASX will also continue to operate as separate markets for the time being, so that means current limitations will remain. Even if they become a common market, it remains to be seen if investors on both sides are prepared to become less parochial - lack of cross-border interest and liquidity killed the trading link between the two markets set up in the early 2000s. And then there are the usual challenges associated with integration post-merger, which will demand a great deal of management time and focus.

It's by no means a done deal, and the biggest hurdles that the SGX may face may not be in Australia but here at home - it will not come as a surprise if the deal is seen favouring ASX's shareholders more than SGX's. The plan also requires the approval of SGX's 30,000 shareholders, and a diverse shareholding base means that no shareholder hold more than 5 per cent of the exchange (excluding SEL Holdings which holds a 23 per cent, but non-voting, stake on behalf of the financial sector development fund). This means that Mr Bocker will have his hands full convincing shareholders that his plan is not only bold, but right.

[Musicwhiz]

Goh Eng Yeow's view. He is an ST correspondent.

The ASX-SGX merger
October 26, 2010 Tuesday, 03:34 PM
Goh Eng Yeow comments on the negativity surrounding the ASX-SGX merger.
--------------------------------------------------------------------------------

Not since the aborted attempt by SingTel to marry its Hong Kong counterpart in 1999 have I witnessed a more vitriolic outpouring of vibes like the one which surrounding the proposed merger between the Singapore Exchange and the ASX.

Actually, I am not surprised by the ferocity of the attacks at all.

Admittedly, a foreign company tries to buy a national icon, emotions are likely to run high.

And even though the rationale for the sale may be sound, people are not likely to listen to reason at all.

They are more likely to be ruled by their instinct, rather than cool-headed thinking.

Even as I write, the share price of both ASX and SGX have come under selling pressure, as investors vote with their feet, rather than await the outcome of the intense scrutiny which the Australian government promises to put the deal to.

At its close, ASX had fallen by 7.4 per cent to A$38.67 , or almost A$10 below what SGX is willing to pay for it.

SGX itself hasn't fared as well either. Between last Thursday , the day before the emergence of leaks about its mergers talks with ASX , and yesterday, its share price had plummeted by 11 per cent.

It is a strong signal of the doubts surrounding the viability of the deal which must clear significant regulatory hurdles in Canberra.

The strong language surrounding the deal doesn't help.

Take this note sent to me by my broker quoting Bob Katter, an independent senator from Queensland, saying he had no wish to live in a country of serfs working for foreign landlords.

The note then went on to say that independent senators wield disproportionate power in Australia's minority government and that 'political parochialism is well and alive in Australia and can scupper the deal'.

It ended by warning investors of the danger to assume that the SGX-ASX deal would take place.

Considering the heat that has been generated, one question that crops up is how much advice the SGX board gave to its chief executive, Magnus Bocker, a newcomer to the regional scene, after spending most of his working life in his native Sweden and then New York where he was Nasdaq OMX's president, on how to handle the ASX merger issue.

Certainly, some of them would have a fair share of their own skirmishes in Australia.

SGX director Lee Hsien Yang oversaw the A$14 billion takeover Cable & Wireless Optus takeover in 2001 during his watch as SingTel boss, while retiring SGX chairman JY Pillay was chairman of Singapore Airlines when it attempted to buy a stake in Qantas nearly two decades ago, before it was listed.

Certainly, Mr Bocker will have his work cut out for him in the coming months.

I believe that only an outsider like him, who does not carry the emotional baggage accompanying most Asian bosses which dictate what they can or cannot do, will even dare to make an attempt at such an audacious deal.

I take my hats off to him for at least making the effort to try. Others will surely be too timid, or set in their way, to even bother.

It certainly sets the bosses of other Asian bourses thinking. Tokyo Stock Exchange's president, Atsushi Saito, is at least candid enough to admit that the SGX-ASX deal 'gave him an opportunity to think thoroughly on how to remain competitive'.

[D123]

Long-term funding secured for proposed ASX-SGX combination

- To create the premier international exchange in Asia Pacific
24 January 2011 – Commitments for long-term financing facilities for the proposed ASX-SGX
combination announced on 25 October 2010 have been secured.
The proposed combination brings together complementary businesses of two successful
exchanges in the Asian time zone to create the premier international exchange in Asia Pacific.
The funding comprises term loans of S$3.8 billion and A$750 million to be made available by
well-established banks – Australia and New Zealand Banking Group Limited, The Bank of TokyoMitsubishi UFJ, Ltd., Singapore Branch, DBS Bank Ltd., Oversea-Chinese Banking Corporation
Limited, United Overseas Bank Limited and National Australia Bank Limited. Australia and New
Zealand Banking Group Limited has been appointed as the co-ordinator in relation to these term
loans.
Said Mr Magnus Bocker, CEO of Singapore Exchange, “We thank the six banks for their
confidence in the proposed combination and their support towards creating the leading Asia
Pacific exchange. This transaction has attracted significant interest from the loans market and
we are pleased to have achieved competitive pricing consistent with our good credit standing.”
The term loans are in tranches with tenors of three years and five years. The interest payable for
the S$ term loan will be based on Singapore dollar swap offer rate plus a margin of 0.55% per
annum for the 3-year tranche and 0.72% per annum for the 5-year tranche. The interest for the
A$ term loan is based on the relevant Australian bank bill swap bid rate plus a margin of 0.75%
per annum for the 3-year tranche and 1.01% per annum for the 5-year tranche.

The share prices of SGX and ASX are still ripe for arbitrage. I think the merger is a probable event (> 50% chance) with a potential return of 50%. So I wonder why no traders are doing it...

[Nick]

Why do SGX have a potential return of 50% ?

[D123]

Why do SGX have a potential return of 50% ?

Okay, I did this calculation briefly so there might be mistakes. But here's the logic.

The offer made by SGX is
Cash: A$22
Stock: 3.473 SGX shares (newly issued)
Assuming 1.28 AUDSGD exchange rate, the total offer is S$57.68.

Let's say you enter a trade whereby you short 3.473 SGX shares at S$8.50 and long one ASX share at A$38. Your outlay will be S$48.64(ASX share) - S$29.52(SGX shares) = S$19.12. The correction that should take place is about S$9.04, which can be quickly calculated by the shortfall between the offer in SGD and one ASX share in SGD. Therefore, this S$9.04 price correction represents about 50% return from your S$19.12 outlay.

Of course this is theoretical, and doesn't include transaction costs and borrowing costs of holding short positions. A weakening of the AUD by x% will also increase the returns by approximately the same basis points, with the converse being true also.