Economic imperialism à la S’pore

Maxwell Coopers
Free Malaysia Today

A “battle royal” appears to be brewing between Singapore and Australia. And as always in the sometimes testy relationship with Down Under, most of the angst usually revolves around issues of sovereignty amidst a subtext of supposed “economic imperialism”.

The latest shot across the bow is a proposed Singapore plan to buy over Australia’s bourse at a staggering S$11billion (RM26.4 billion).

According to pundits, Singapore is hoping that the merger of both the Singapore and Australian bourses will boost the former’s market capitalisation, which took a beating in the global financial crisis of 2008.

The Singapore Exchange (SGX) currently has a market capitalisation of about A$8 billion while the Australian Security Exchange (ASX) has about A$6 billion.

Yet another benefit is the addition of some huge blue-chip companies like BHP Biliton and mining giant Rio Tinto.

But such allure only hides a looming battle: the deal is expected to meet fierce opposition from Australian legislators who consider ASX as an icon that must not be sold to an overseas interest.

This brings back the memory of the much-maligned and bigger A$14 billion bid by Singapore Telecom for Australian telecommunications company, Optus, in 2001, and the grave security implications the takeover triggered.

Optus is also cherished as an Australian icon.

And like Optus, an important strategic asset (ASX) is being targeted in the eventual hope that it will be sold.

Singapore surely realises that any hostile takeover of a company, particularly if it is a strategic national asset, is not the same as seeking out an airport or seaport in any Third World underdeveloped state.

How intense is the opposition to Singapore’s bid for ASX?

“Nobody here liked it when they bought Optus,” a publisher in Melbourne told FMT.

“There was no transparency and considering that SGX belongs to Temasek Holdings (Singapore’s state-owned investment company), we are deeply apprehensive of them (Temasek). Temasek never explained why Charles ‘Chip’ Goodyear left so abruptly after he was groomed for high office,” he said.

Goodyear was the former CEO of Rio Tinto who was headhunted to lead Temasek. The fact that he was a foreigner did not concern Singapore despite the authorities making it clear that Temasek will always be headed by a Singaporean.

One more precious asset

The publisher’s sentiment reflects the depth of resentment against the proposed SGX-ASX deal. But the most strident criticism is expected to come from Australia’s legislators who have vowed to block the deal.

Even Japan’s Tokyo Stock Exchange (TSE) was highly critical of the deal, with its president making no bones of what he felt.

“As the biggest stakeholder in SGX, we are not happy that the move could cause a big dilution to our holdings,” said Atsushi Sato, TSE president.

Yet there is no dismissing the fact that the proposed merger is borne out of commercial profitability and a keen sense of pragmatism.

According to Singapore, if and when Australia’s Parliament does indeed approve the deal – which in any case looks increasingly dicey – the merger of the two bourses will propel SGX into the big league: the combined exchange make it the seventh largest in the world.

Perhaps even leading Malaysian companies will be drawn to list on the SGX.

If and when the ASX deal comes through, Temasek will have one more precious asset to hold onto dearly.

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