Interpac Business and Migration Solutions Melbourne Australia

（December 6, 2010）

ACCESS Economics says the Singapore stock exchange's $8.4 billion takeover of the ASX Ltd is not contrary to Australia's national interest.

The acquisition would benefit the Australian economy, the research firm said.

In a report commissioned and released today by the Australian Securities Exchange, Access Economics said the politically sensitive deal would improve Australia’s chances of becoming a financial services hub in Asia and lower the cost of capital for Australian companies.

The takeover would also improve the economic welfare of Australians and diversify their savings by reducing “home country bias”, the report said.

The deal, one of the biggest proposed takeovers of the year, requires approval from Australia’s Foreign Investment Approval Board and Treasurer Wayne Swan who would assess whether the deal would better the country’s prosperity.

In a positive for the ASX, the report also dispels another politically sensitive point of whether the deal would reduce regulatory control of Australia’s market.

The Australian operations of ASX-SGX would continue to be regulated by ASIC, with an Australian board and chair. But only four of the 15 directors of the merged group are expected to be Australian.

“There is no loss of regulatory authority or oversight of exchange operations in Australia implied by the merger of ASX and SGX,” the report said.

The report comes as the ASX steps up its public campaign to persuade politicians and the market of merits of the proposed takeover, with outgoing ASX managing director Robert Elstone exclusively writing in The Weekend Australian of its benefits.

The merged group would become the fifth largest securities exchange in the world by market capitalisation at about $US12.3bn ($12.4bn) and become the second largest listings venue in Asia.

Access Economics said the merged group would build a conduit into Asian financial markets to improve financial flows between Australia and Asia and connect Australian funds managers to “fast-growing pools of Asian savings”.

It would also reduce the cost of capital by increasing access to foreign capital, liquidity and diversification.

“ASX-SGX is a natural fit for encouraging Asian capital to invest in Australia’s economic potential,” the report said.

Interestingly, the report also said the ASX should be allowed to respond to new competitors entering its markets, namely that of Chi-X, which is planning to launch next year.

“If ASX-SGX were disallowed, this could add to perceptions, especially in Asia, that Australia is not welcoming of foreign investment and/or is overly protectionist,” it said.

(Source:theAustralian)