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Bulge Bracket Gets Slimmer in Asian Investment Banking revenues
1 September, 2016Euromoney, August 30 2016
When Boon Chye Loh, best-known as the driving force behind Deutsche Bank’s once-formidable global markets business for Asia, took on the top job at the SGX, he faced a challenge.
Singapore’s stock exchange can no longer count on an onslaught of new listings to drive revenues. Almost all the big blue-chips are already listed.
Foreign stocks, most notoriously the so-called S-chips that list mainland Chinese businesses of variable merit in Singapore, have fallen out of favour among local investors.
The Reits market, a Singapore mainstay, is hampered by the fact that almost all the good commercial real estate in Singapore is already securitized.
And a hoped-for generation of entrepreneur-driven local companies has largely failed to materialize – and where it has arrived, such as in tech, those entrepreneurs tend to find Nasdaq just as appealing a prospect as the SGX.
In fact, if anything, the trend is not towards new listings but delisting of existing ones.
On top of that, the natural answer to that quandary – buy foreign stock exchanges and consolidate – has been proven to be prohibitively difficult, by the SGX itself. In late 2010, the then-CEO Magnus Bocker, a veteran of no less than nine international exchange combinations at the time, launched a bid for the Australian Stock Exchange. People warned that, no matter how good the synergies might look, Australian protectionism would nix the deal, and so it proved: Bocker’s vision of regional consolidation was much more difficult to realize in Asia than in Europe, or even across the Atlantic.
So what to do? The SGX’s bid for Baltic Exchange, a deal whose terms were formally agreed on August 22, gives us an answer – and it’s a not dissimilar answer to one reached by the rival Hong Kong stock exchange. If you can’t grow through stocks, try another asset class.
Full article: http://www.euromoney.com/Article/3581746/BackIssue/96742/Asia-SGXs-Baltic-Exchange-bid-seeks-a-new-path-to-growthr.
