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All aboard the Singapore express

DID you enjoy your last trip to Singapore? No doubt you stayed at the Marco Polo and sipped gin slings with tiffin in Raffles dining room. Soon you will be able to buy a piece of the Lion Republic by simply picking up the phone. The Australian and Singapore stock exchanges are to begin electronic trading in each other’s shares before Christmas. Perth brokers and investors will be among the vanguard of the venture, which is the first co-trading system of its kind in the world.

We will be able to invest directly in Singapore-listed companies, gain access to real-time prices and company announcements, and settle up in Australian dollars.

The facility should appeal to retail players in both centres. Initially, Australians will be able to trade shares in 49 Singapore companies. These include Singapore Airlines, the century-old soft drinks group Fraser & Neave, the quaintly named Cycle and Carriage company, which distributes Mercedes Benz, Singapore Press, publishers of The Straits Times, and Raffles Holdings.

In the other direction, Singapore investors can choose from a list of 51 stocks including Telstra, Qantas, QBE insurance, Wesfarmers and Lend Lease.

The companies were selected on the criteria of liquidity, market capitalisation and “familiarity”.

The linked exchanges arrangement has been two years in the making and considerable technical problems had to be overcome.

Among a number of brokers with Perth offices keen to get involved are Paterson Ord Minnett, Hartley Poynton, Mortimer & Chua, and Hogan & Partners.

The ASX people in Sydney were apparently surprised at the high level of enquiry and interest shown by those in Western Australia. They should not have been. We are on the same time zone as much of Asia, including Singapore.

This is a big advantage that successive State governments have not yet fully grasped. A Singaporean businessman strolling back to the office after a good lunch at the Tanglin Club would not bother ringing Sydney at 3pm to talk to a bank or check the market. Most people will have left the office. The trading desks here in Perth would still be manned.

We also have a natural demand for the new linked exchange trading. Perth is home to thousands of Singaporean and Malaysian people, who chose the city largely because of its proximity to Asia. Many would welcome an efficient way to dabble in a market they are familiar with.

Then there are the legions of Asian students in our five universities, the majority studying some sort of business course. They might mention to dad that the Australian stock market seems to have a lot going for it.

Singapore investors certainly would be interested in our resource sector. Western Mining, Woodside and BHP Billiton are on the electronic trading list. Curiously, Singapore has no listed property trusts, so investors there should find the 8 per cent yields in the likes of AMP Industrial Trust and Macquarie Countrywide rather tasty.

The Singapore stock market is capitalised at $370 billion, about half that of Australia. Although share prices had a good run last month, the market is still down more than 25 per cent on the year. Singapore was pushed into recession because it is one of the most exposed Asian economies to external trade and the global collapse in electronics demand. The well-regulated market may be one of the best ways to play the regional recovery.

It will be interesting to see which way net capital flows go in the dual trading, which is likely to develop slowly. The availability of good research, and local knowledge, is important. Paterson Ord Minnett will rely on its 50 per cent shareholder JP Morgan Chase to supply material from its Singapore office. Some brokers will be swapping research with their Singapore counterparts. Mortimer & Chua has appointed its Singapore-born trader Jeff Tay as the man for clients to talk to.

Hong Kong would be the logical next bourse to be brought into tripartite trading, and that might be just the start. ASX chief Dick Humphry has been having talks with the London Stock Exchange. They will be taken further, once the battle for control of the LSE between Euronext in Paris and Deutsche Borse in Frankfurt is resolved.

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