Hong Kong exchange open to alliances, adds voice to merger

Thu Feb 10, 2011 2:06am EST
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By Kelvin Soh and Mike Smith

HONG KONG/SYDNEY (Reuters) - The Hong Kong stock exchange said on Thursday it will consider international alliances after Deutsche Boerse and NYSE Euronext announced plans to form the world's biggest trading powerhouse.

Deutsche and NYSE said they are in advanced talks to form a marketplace that would have annual trading volume exceeding $20 trillion, the latest in a flurry of mergers pointing to a shake-up of an industry under intense cost pressure from upstart electronic rivals.

Hong Kong Exchanges and Clearing Ltd, the world's biggest exchange operator by market value, said on Thursday it is open to international alliances and partnerships, although the exchange added that it had not identified any opportunities.

"Due to changes in the financial market landscape, HKEx will consider international opportunities for alliances, partnerships and other relationships that present strategically compelling benefits consistent with its focus on markets in China," the exchange said in an email statement.

News Deutsche Boerse could be close to buying NYSE Euronext came shortly after the London Stock Exchange announced a bid for Canada's TMX.

The merger activity spurred a rally in shares of Australia's ASX, which is trying to overcome domestic opposition to a $7.9 billion takeover bid from the Singapore Exchange.

In contrast, HKEx shares fell on Thursday by the most in about three months on worries a round of mergers would intensify competition for the exchange. Shares dropped over 3 percent before the mid-day break.

HKEx has so far avoided any moves to merge because its strong pipeline of China-backed IPOs. Other exchanges in Asia have been reluctant to seek tie ups due to tight ownership and political obstacles.   Continued...