SBX, Singapore’s main stock exchange, has just sealed a deal to buy ASX, the Australian Securities Exchange, in a deal valued at $8.4 billion AUD ($8.3 USD), the Sydney Morning Herald reports. This is the first major consolidation of Asian stock exchanges.
There’s many angles to this deal:
- China, of course. Singapore’s economy is all about trade, and trade in the region increasingly means trade with China. Meanwhile Australia’s economy is handcuffed to China, for better or worse. And commodities. Commodities for China.
- Increased volume in financial markets. Stock exchanges make money when there’s more volume in financial markets. SBX clearly thinks there’s going to be more volume in Australia, and financial markets more generally.
- Increased international competition among international exchanges. ASX used to have a monopoly on stock trading in Australia, but Europe’s Chi-X Australia is expected to enter the market in 2011. Before the crisis, with black pools, high frequency trading, globalization and good credit, stock exchanges were consolidating all over the place to win over investors. Seems like the party’s on again.
- Bullish Asia. At the end of the day, consolidation among stock exchanges in Asia means exchanges think Asia is going to keep growing, and fast, despite fears of double dips in the United States and Europe.