SGX...the sleeping giant
Sometimes truly significant events slip beneath the cracks and few people notice. Our brains are trained to focus on tight definitions and established topics. Occasionally, the result is that we ignore huge events wrapped up in no frills packages.
For instance, when I say that I am getting ready to make a market, you are bound to figure that I am set to quote a bid and an ask. Though this would generally be the correct assumption, however, I would like to alert you guys to a real market maker . An exchange which goes from huge to behemoth.
What we are on the brink of seeing is a consolidation which will greatly affect world markets. Though the effect may not be felt immediately the Singapore Exchange (SGX) $8.3 billion bid for the Australian Securities Exchange (ASX) is going to change Asian and world markets quite a bit.
Though the proposed merger faces heavy regulatory obstacles signs point to smooth sailing. Increased transparency, liquidity and more orderly price discovery fall into the multitude of rationalizations of why the transaction makes sense.
As usual, I like to look at a few possible drawbacks or at least issues which do not jump to the forefront.
The two main thoughts coming to my mind are:
1) Since SGX is almost 1/4 owned by the Singapore government, how good of an idea is it to have (what would become) Asia's second biggest exchange (behind HK) and the world's fifth-largest, so closely pegged to one historically fragile and corrupt government entity?
2) What long term effects will this have on world commodity prices? Namely, between the Port of Belawan and the ASX, a huge segment of the world's most important commodities will be presided over by one entity.
For those who go back a few years, recalling the Asian Financial Crisis is by no means a picnic. Though I am very interested in the outcome of this transaction, I am also very puzzled by how little fanfare it is getting. In a time when central bank activity has taken center stage, what do we make of a (de facto) state owned exchange expanding internationally?
Mark my words, this is a huge event. For it to be flying so low beneath the radar is very odd. Anyone interested in commodities and macro economics would be wise to spend some time researching this proposed merger and its potential price swing effects.
I am going to be looking at the SGX a lot more as a global macro indicator if this comes to fruition. I suggest you do the same.
To your first point - by most measures the Singapore government is one of the least corrupt and most stable government entities in the world and has been that way for a least the last two decades.
http://en.wikipedia.org/wiki/Corruption_Perceptions_Index http://siteresources.worldbank.org/INTWBIGOVANTCOR/Resources/1740479-11… http://viewswire.eiu.com/site_info.asp?info_name=social_unrest_table&pa…
Now Singapore isn't exactly the most democratic place on earth, but that's a different issue. Net-net though, its policies have largely been international business friendly - a function of necessity given the nation's lack of natural resources and small population.
In a weird way, one could argue that the Singapore government is rather more predictable in its behavior than public/private markets which could be seen as a boon to long term stability and possibly the reason why there isn't too much of an uproar over the transaction. Not making a case for nationalizing businesses, simply offering up an observation in this particular situation.
dude, get your facts right... Singapore boasts one of the least corrupt and most efficient government in the world. The same government that created the "Singapore Miracle", propelled the country to become one of Asia's 5 Tigers and created a world class trading hub.
Did you write this post with your mask on?
I suggest doing business in a place before making yourself it's press secretary.
Libor, what are you babbling about? I know my grill's a bit busted, but damn..."a mask"???
Cold brother. Cold.
MMM: I happen to know quite a bit about doing business there, its political structure, business laws, etc. would love to have a discussion with you if you're up for it, find out what your understanding or misunderstandings are...
I read this and immediately heard the bell that starts a boxing match...
This one's
, I suggest a heady stout and some bacon wrapped bacon.
As long as I can wash it down with some deep fried beer and oreos...that clip never gets old.
I was just at a place that offers a chili baked in the stout of your choice, plus a bacon stuffed, cheddar cheese glazed, deep fried doughnut...heard Mike was studying for his Series 7, btw
Hearing about that wonderful dish you described makes me want to go long type 2 diabetes pharm companies
If Mike's lucky Shia LeDouche will tutor him with his new found wealth of financial knowledge.
That's fine, Z. But when my shipment gets indefinitely delayed 3 times before I agree to "special insurance fee" under the table right there in the PofB; that's corruption. Between practice and the theories of political structure, business law, etc...lies reality. Emphasis on "lies".
I'm native Singaporean, now working in New York. My family has been running businesses of various kinds in Singapore for decades. Inasmuch as that means anything to you, from a governance standpoint, it's as fair a playing field as you can get and stability has never been an issue.
Shocking, never would have guessed you had a personal interest.
Type 2 diabetes + Free Base Habit a.k.a. The Trophy Wife Hedge
What kind of effect would it have on the NYSE? and commodities market?
The deal will probably not go ahead. There's already too much political rumblings about losing the "iconic" ASX to an entity part owned by a foreign government.
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