Doomed from the day it was conceived, and rightly so. That's the verdict on Singapore's proposed takeover of the Australian Securities Exchange.
Doomed from the day it was conceived, and rightly so. That's the verdict on Singapore's proposed takeover of the Australian Securities Exchange.
The only question now is whether we will get to watch a three-act farce with one arm of the Australian Government forcing the bid to proceed while several others wait to kill it.
That might happen if the Australian Securities and Investments Commission deems Singapore's suggestion of an offer valued at $48 a share to be a formal bid, and demands that it be made to all shareholders of ASX - the listed company which owns and operates Australia's premier stock exchange.
Unfortunately for ASIC, one of Australia's more accident-prone government departments, if it sticks to its own rules and demand the lodging of a formal bid then it will be overruled by either its masters in government, or the government will be overruled by its masters in Parliament.
If you are a shareholder in ASX that might seem to be unfair because the price of your company has soared, and then plunged as business and politics have clashed head-on over the takeover bid.
Last week, before an outbreak of media speculation, ASX shares were trading around $34. As the news broke the stock rose as high as $43.89, a gain of 29 per cent in a matter of hours for a few lucky speculators.
As news of political resistance rose ASX slumped back to $38.67 yesterday, and should fall further today.
The problem for Singapore and the cheer squad egging on the bid is that they fail to understand the unique position of the ASX, and the fact that the past few years have provided a rare insight into how sometimes (but not often) governments are smarter than business.
That's why the Australian Government, from the Prime Minister, Julia Gillard, down is sending a clear signal that the ASX takeover proposal will be seen as a test of national interest, and dumped despite claims that such a move would make Australia a "financial backwater".
That comment, from a former ASX chairman, Maurice Newman, shows an astonishing lack of understanding about Australia's role in the region, as neither part of Asia nor part of the western world, and how being different means we avoided the worst of the global financial crisis.
Independent Australia bridges the divide between the old world of Europe and the U.S. and the new world of rising Asia.
It is an astonishingly fortunate position in which we find ourselves and while it will sometimes require great diplomatic skill to hold that position it is important that we do.
People like Newman would rather see Australia, through its institutions such as the ASX, become much closer to Asia - because that's where the biggest profits will be made in the future.
But, if we become too much a part of Asia we will not only see our culture and heritage swamped by the vastly superior financial firepower of that region we will become exposed to the mistakes which will surely be made there, as they always are in periods of rapid economic growth.
Three years ago some people, perhaps Newman amongst them, were arguing that Australian business, especially banking, was over-governed and our banks were not being permitted to participate in wonderful new get-rich-quick financial products such as sub-prime mortgages and collatorised debt obligations.
If ever there was a party to miss that was the one.
Australia's tight leash on its banks was a good thing. An equally tight leash on the stock exchange is equally good, and while business might not like it this is a case of politicians having a better understanding of what's right for the country.
