ASX takeover faces regulatory hurdles

Georgina Robinson
The Age

Australian Greens leader Bob Brown

Federal Treasurer Wayne Swan has warned that Singapore Exchange’s $8.4 billion takeover of the Australian Securities Exchange still has a number of regulatory hurdles to clear before going ahead, as the Greens and the Coalition voice concerns over the deal.

Mr Swan told parliament today the deal would be scrutinised by the government’s Foreign Investment Review Board, which would seek advice from the Australian Securities and Investment Commission and the Reserve Bank of Australia.

Parliament would also need to approve a new regulation allowing a single shareholder to own more than 15 per cent of the ASX, he said.

“The regulatory process ensures that decisions are always taken in Australia’s national interest and that the market integrity of the ASX will be preserved,” Mr Swan said.

A proposal of this type would be subject to ‘‘extensive regulatory considerations’’ under Australia’s foreign investment policy and the Corporations Act.

“Australia’s financial system has performed better than any other during the global financial crisis and of course the ASX is an important part of our financial system’s architecture.

“So we will continue to consider all transactions with the objective of carefully and methodically building Australia’s reputation as a financial services hub and, as always, we will do this in the national interest.”

Political concerns

The Treasurer’s comments come as key political leaders voiced concern about the deal.

Greens leader Bob Brown said he will not support the foreign takeover of the ASX, citing Singapore’s lack of respect for Australia.

Senator Brown said he did not believe the $8.4 billion friendly bid for the ASX would be in the country’s national interest.

A 30-year-old remark made by former prime minister Lee Kuan Yew that Australia was the “poor white trash of Asia”, as well as the execution of convicted Australian drug trafficker Van Nguyen, demonstrated Singaporean authorities’ dim view of the country and its assets, he said.

“We don’t see an advantage for this nation in having that stock exchange being controlled from Singapore, particularly where there is such a big controlling – and I use the word ‘controlling’ outside the number of shares – interest from the Singaporean authorities,” Senator Brown said.

“[They] don’t respect this nation in the way they should. [They] don’t respect our aspirations for a more democratic and fair society, and [they have] a poor track record in regarding Australians as equals.”

His comments contributed to a plunge in ASX shares, which fell as much as 8.6 per cent today before the stock recovered to recently trade $2.46, or 5.9 per cent, lower at $39.29.

The exchange’s share price jumped 20 per cent yesterday, after the company agreed to a takeover by the Singapore bourse. The rise was well below the 37 per cent premium Singapore is offering, reflecting investor doubts over regulatory approval to the deal.

The Foreign Investment Review Board will look at the proposal, which will require approval from Treasurer Wayne Swan and ASX shareholders.

Proper process: Gillard

Prime Minister Julia Gillard would not be drawn on the matter except to say the deal needed to be in the national interest.

“I believe questions of foreign investment should be looked at through proper processes, we should be guided by Australia’s national interest and our prosperity and prospects for working people … to have the benefit of a strong economy and access to jobs,” Ms Gillard said.

Opposition Leader Tony Abbott has told his Coalition colleagues there are legitimate concerns about the planned merger.

But he emphasised the Coalition was in favour of foreign investment.

Mr Abbott said the Coalition would look carefully at the proposal before coming to a policy decision.

Both Mr Abbott and opposition treasury spokesman Joe Hockey briefed a joint Coalition parties meeting today about the opposition’s likely stance to the merger.

In national interest?

Mr Hockey told the Seven Network earlier today said he was also not convinced the merger was in Australia’s interest.

“I want to hear from [Treasurer] Wayne Swan why the ASX being taken over by the Singapore Stock Exchange is in our national interest,” he said.

Singapore was Australia’s competitor for financial services jobs and Mr Swan would want to know from the ASX and the government if the takeover would help Australia become a financial centre for the Asia-Pacific region, Mr Hockey said.

“It [the ASX] is effectively a monopoly,” he said. “It is iconic for Australia.”

He welcomed foreign investment and could not be critical of foreign ownership, he said.

“But we’ve got to consider carefully, when a monopoly in the Australian market is being bought out by an overseas interest, whether that is in our interest.”

The ASX had offered the opposition a briefing on the merger, Mr Hockey said.

Independent MP Bob Katter criticised the buy-out, likening it to “putting the High Court of Australia up for sale”.

“It is like selling or giving the gearing system in your motor car to some other driver,” Mr Katter said.

“I mean this is the mechanism by which the Australian economy operates, it will be controlled by people overseas.”

Brown links human rights to ASX merger

Sydney Morning Herald

Australian Greens leader Bob Brown has launched a scathing attack on the human rights record of the Singapore government as he flagged his party’s opposition to a merger of the Australian Stock Exchange (ASX) and the Singapore Exchange.

Earlier the coalition demanded the government show why the merger was in the national interest.

Senator Brown said the merger proposal was a subjugation of the ASX by a company 25 per cent owned by the Singapore government.

“We should tell them nothing doing,” he told reporters in Canberra on Tuesday.

The Greens would not facilitate or support “this takeover” unless it could be shown to be in the nation’s interest.

“The government here and those advocating it will have a big job to show that,” Senator Brown said.

Senator Brown used the hanging execution of Australian citizen Nguyen Tuong Van in 2005 and repression of opposition figures in Singapore to emphasise the island nation’s “appalling” human rights record.

“This is a state that tramples all over freedom of speech, democracy, the rights of oppositions, the ability for public discourse,” he said.

“It is a classic rule by the oligarchs of Singapore.”

Senator Brown warned the ASX would “wither on the vine” if the merged exchange was majority-controlled by Singapore interests.

The Greens believe the ASX is a very important part of Australia’s free-enterprise system, Senator Brown said.

“We don’t see an advantage for this nation in having that stock exchange controlled from Singapore,” he said.

Independent MP Bob Katter has already flagged his opposition to the merger, describing it as “lunacy on a grand scale”.

He expects other crossbenchers in the lower house to support his motion in parliament in the hope of blocking the takeover.