China makes the very best of neighbours for Australia
WHILE Australia’s first stock exchange officially opened in Melbourne in 1861, some 10 years after the start of the Gold Rush, the national Australian Stock Exchange was not established until more than 100 years later, in 1987.
But ASX Group, current owner of the entity created by the merger of the Australian Stock Exchange and the Sydney Futures Exchange in July 2006, is now one of the world’s top 10 listed exchange groups by market capitalisation.
BIG THINGS
It still wants to get bigger if it can. The group’s most recent attempt to grow in size and influence was a proposed merger with – read takeover by – the Singapore Stock Exchange (SGX).
The plan was to create the region’s pre-eminent exchange by combining “the strengths of ASX through its listings, stock options and fixed income franchises, with SGX, the Asian gateway for international listings, equity futures and over-the-counter (OTC) clearing”.
And had the deal gone through, the resulting exchange would have had a market value of US$14bn.
It would also have become the second largest listing venue in the Asia-Pacific region, with over 2,700 listed companies from more than 20 countries, including 200-plus listings from Greater China and more than 900 resource sector listings.
SINGAPORE SLUNG
However, on 8 April, the Australian treasurer and deputy leader of the Australian Labour Party, Wayne Swan, decided to block the merger.
ASX Group’s David Gonski says that this will not prevent the company seeking further ways to increase its reach.
He said: “We believe very strongly that Australia can and should be involved in a much wider dimension than just Australia onshore.”
SGX, meanwhile, has already moved on to join forces with Bursa Malaysia, the Philippine Stock Exchange and the Stock Exchange of Thailand, appointing US technology firm Sungard to provide a cross-border trading platform.
The move is part of a wider plan by the 10-country Association of South East Asian Nations (ASEAN) to transform itself into a unified trading bloc with free flow of capital by 2015.
While that development is bound to be of interest to investors keen on emerging Asian markets, those who prefer commodities and resource stocks will be watching closely to see what ASX does next.
Australia’s steady economic growth – it is now the world’s fourteenth largest economy – has been driven by its position as one of the largest global suppliers of raw materials such as coal and iron ore – and one well-placed to benefit from the near-insatiable demand for such resources from China’s breakneck economic expansion.
AMBER NECTAR
So it is no surprise that the resources sector makes up a massive 23 per cent of the Australian equity market.
Only the financial services sector is bigger, with a 35 per cent market share.
One of the biggest players in the resources field is Rio Tinto, which first listed on the ASX in 1962 as Rio Tinto-Zinc Corporation.
Mining giant BHP Billiton is also listed in Australia, along with many smaller resources companies such as Focus Minerals.
If that sector fails to excite you, however, beer manufacturer Fosters is another household name that you can invest in through the Australian exchange.
MAJOR ASIA-PACIFIC LISTINGS
● PETROCHINA
Hong Kong listed PetroChina is the listed arm of the state-owned China National Petroleum Company. Headquartered in Beijing, it is China’s biggest oil producer and is the most valuable company by market capitalisation in the world. Its shares are listed in both New York and Shanghai, as well as Hong Kong.
● CHINA MOBILE
China Mobile is the world’s largest mobile phone operator. More than 600m subscribers use its nationwide mobile telecommunications network, which is also the largest of its kind. In 2010, Vodafone made £4.2bn in cash by selling its 3.2 per cent stake in the company. China Mobile’s shares are listed in Hong Kong and also on the New York Stock Exchange.
● BHP BILLITON
BHP Billiton is a global mining, oil and gas company headquartered in Melbourne, Australia. It is the largest company in Australia in terms of market capitalisation and the third largest in the world. Created in 2001 by the merger of the Australian Broken Hill Proprietary Company (BHP) and the Anglo-Dutch Billiton, its shares are listed in both Sydney and London.
● RIO TINTO
The Rio Tinto Group is a multi-national mining and resources company headquartered in London and Melbourne. It was founded in 1873 as a result of the purchase of a Spanish mine complex and now has operations on six continents, producing commodities including aluminium, copper, coal and diamonds.
ASIA-PACIFIC: FACTS AND FIGURES
● LOCATIONS
ASX
Exchange Centre, 20 Bridge Street, Sydney
SGX
2 Shenton Way, Singapore
HKEx
Exchange Square, Central, Hong Kong
● OPENING TIMES
[Local time]
ASX: 10am
SGX: 9am
HKEx: 9.30am
● CLOSING TIMES
[Local time]
ASX: 4pm
SGX: 5pm
(with a break between 12.30pm and 2pm)
HKEx: 4pm
(with a lunch break during which some trading continues between midday and 1.30pm)
● CURRENCIES
ASX: Australian dollar
SGX: Singapore dollar
HKEx: Hong Kong dollar
● NUMBER OF LISTINGS
ASX: About 2,240 companies
SGX: About 800 companies
HKEx: More than 1,400 companies
● MARKET CAPITALISATION
ASX: US$1.4 trillion
SGX: SG$700bn
HKEx: US$2.7 trillion