‘Bourse veto will not hurt investment’

effective blocking of a politically toxic merger between the Australian and Singaporean stock exchanges.
Treasurer Wayne Swan said on Tuesday he had “serious concerns” about the deal on national interest grounds, and intended to accept the unanimous advice of the Foreign Investment Review Board (FIRB) that the takeover would not work.
The Singapore exchange has been asked to provide further comments, but has made clear it does not intend to alter its proposed Aus$8,4 billion (US$8,7 billion) bid for the ASX.
Swan took to the airwaves yesterday after fund managers and business leaders said his decision sent a negative signal to foreign investors.
“No, I do not believe so,” he told ABC radio, when asked if Australia’s international standing had been harmed.
“I know that there are some who will bang a drum with their own particular view and their own particular commercial interest, but I have consulted widely, particularly in the financial sector here and abroad.
“There are some very clear views coming forward to me through that consultation. But I will deal with all of those issues when I publish all of the reasons in full, after I have taken my final decision.”
Australian media suggested Swan’s decision was made more on political grounds than in the national interest, with several key politicians vowing to block any potential tie-up once it came before parliament for final approval.
The opponents include MPs whom the government relies on to sustain its wafer-thin parliamentary majority. Swan denied he was playing politics with the decision.
“Absolutely nothing could be further from the truth,” he said, adding that Australia welcomed foreign investment.
“We have got an open and transparent process and I have acted in accordance with well-established guidelines and legal advice.”
The ASX and Singapore Exchange Ltd announced their plans last October to create what they said would be one of the world’s largest and most diversified financial trading hubs.
But the proposal hit hurdles in Australia, where worries over foreign ownership and Singapore’s democracy and human rights record have been raised.
Mark Daniels, head of Australian equities at Aberdeen Asset Management, said that Swan’s stance was inconsistent.
“I do not see why it could not go ahead,” he told the Australian Financial Review newspaper.
“If you are not going to allow a Singapore takeover of the ASX, why should a Chinese company be allowed to take over an Australian resources company?”
While some Chinese takeovers of Australian companies have gone ahead, notably Yanzhou Coal’s multi-billion-dollar bid for coal group Felix Resources in 2009, others have failed amid political objections in Canberra.
Asked if he was disappointed Singapore would not be coming back with another proposal, Swan said: “That is entirely a matter for them.
“What I have to do is to act on the advice on our legal advisors and well-established processes.”
Australia’s attitude to the merger could see the ASX fall behind its peers, analysts said, amid a climate of global consolidation among exchanges.
Last week, the Nasdaq and Intercontinental Exchange joined forces to make an US$11,3 billion bid for NYSE Euronext, offering NYSE shareholders 19 percent more per share than a rival bid from Deutsche Boerse.
The London Stock Exchange has meanwhile proposed merging with the Toronto bourse to create one of the world’s biggest trading platforms. – AFP.