Singapore Exchange’s (SGX) proposed $8.4 billion takeover of its Australian counterpart would make the combined entity the Asia-Pacific region’s premier exchange-traded funds (ETF) hub, benefiting local financial planners.
Market commentators said that should the deal proceed, dealer groups would potentially have access to a wide range of new ETFs, stocks and other products to use for client portfolios.
Together, the SGX and Australian Securities Exchange (ASX) would offer nearly 2800 securities spanning ETFs, stocks, fixed income, American depository receipts, exchange-traded notes and Singapore government securities, according to the World Federation of Exchanges.
The two firms had a selection of 109 ETFs, compared to 33 alone within the ASX, BlackRock’s ETF Landscape report said.
Tria Investment Partners managing partner Andrew Baker said there was a wide range of ETFs listed in Singapore and some of them were different to what was available locally.
“I think we can say fairly safely that if it does go ahead, it will be a further boost for ETF investors and will give financial planners additional options for client portfolios,” Baker said.
ETFs on the SGX covered asset classes including equities, fixed income and money market securities. Providers include Lyxor Asset Management, Daiwa Asset Management, Deutsche Bank and BlackRock.
Australian ETF providers offer solely equities and commodities-based products.
“While we have seen that ETFs are gaining acceptance and popularity in Australia, I believe this announcement may be a turning point for the ETF segment as the full set of possibilities are realised,” Russell Investments ETF product development director Amanda Skelly said.
“Together, the ASX and SGX will offer the largest number of ETFs in the Asia-Pacific, making the relationship well positioned to take the role of the main ETF hub in the Asian region – a region prime for ETF expansion.”
The ASX and SGX announced the deal on 25 October. Should the transaction be successful, SGX’s current chief executive Magnus Bocker would lead the combined entity.
But the proposed transaction faces significant hurdles, with key political figures including Opposition Leader Tony Abbott and Greens Leader Bob Brown last week questioning whether it was in the national interest.
