SGX denies it was in London Stock Exchange merger talks

SINGAPORE: The Singapore Exchange has refuted a newspaper report saying it was in merger talks with the London Stock Exchange (LSE).

However, the Singapore bourse operator said it was open to deals that would benefit the company.

The report comes amid a number of merger proposals by global exchanges as they seek growth opportunities amid a slowdown in listings and lower trading volumes.

Many of these proposed mergers have been scotched by regulators, but some have gone through.

In June, Hong Kong Exchange bought the London Metal Exchange for US$2.2 billion.

And just last week on July 11, an accord was struck between SGX and LSE to allow cross—trading of their largest stocks.

So, the report of a potential SGX—LSE merger prompted some number—crunching from analysts.

"Over the last 3 to 4 years, the bulk of the money has been raised in Asia, mainly in Hong Kong, because the big companies are coming out of China. The question is would a SGX—LSE merger attracts the Chinese companies to list in this new entity or not," Kevin Scully, executive chairman of NRA Capital, said.

"My feeling is it may not happen. I think you have to accept the real big money will continue to be raised in Hong Kong."

According to Ernst & Young, IPO activity in Asian markets accounted for 35 per cent of global IPO funds raised in the second quarter 2012, totalling some 104 deals and raising US$14.5 billion.

Although Hong Kong only managed to attract 4.4 per cent of the global IPO funds last quarter, it was the top IPO destination in 2011, raising some US$36 billion.

Some analysts questioned SGX’s capacity to finance major deals after a failed takeover offer for the Australian Stock Exchange last year.

Still, LSE is at least 35 per cent owned by cash—rich Borse Dubai and the Qatar Investment Authority.

A merger with SGX could work in their favour, giving them an entry into the Asian markets.

Wong Sui Jau, general manager of Fundsupermart.com, said: "You are seeing more exchanges explore the feasibility of mergers and acquisitions because they want to reduce costs and have more cross—border offerings."

A combined LSE—SGX would rank third in the world in terms of trades, behind NYSE Euronext and Nasdaq OMX.

— CNA/wm