Mixed views on exchange union

Singapore Exchange's decision to buy ASX, Australia's main stock exchange, signals its determination to dethrone Hong Kong as the leading financial centre in Asia.

Its move revives the debate about whether the Hong Kong Exchanges and Clearing needs a strong partner to stave off the threat from the Lion City.

On the face of it, the merger poses a threat to Hong Kong.

In terms of market capitalisation of all its listed companies, SGX is in 21st place, while Hong Kong is seventh. But the combination with the ASX, which is 11th-biggest in terms of market capitalisation, would make the merged Singapore-Australian exchange the ninth-largest.

The combined bourse will have over 2,700 listed companies, surpassing the 1,346 listed firms at Hong Kong. But HKEx still has the China card, and has 556 mainland listed companies, compared with just 200 listed on the combined entity.

The two exchanges said the merger offered investors more choice, and would reduce costs by US$30 million a year. ASX and SGX, however, will remain separate legal and locally regulated entities and the merger also needs regulatory approval.

Hong Kong brokers and accountants differ on whether the merger will affect HKEx. Edward Au, audit partner with accounting firm Deloitte Touche Tohmatsu, said the merger would make the two exchanges more competitive by boosting the size of the market.