The Hong Kong stock exchange, the world's most valuable market operator, said it will consider international alliances after Deutsche Boerse and NYSE Euronext announced plans to form a global trading powerhouse.
Deutsche and NYSE said they are in advanced talks to form a marketplace that would have annual trading volume exceeding US$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.
"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," Hong Kong Exchanges and Clearing Ltd said yesterday.
It had not identified any opportunities, it added.
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 near 5 percent rally in shares of Australia's ASX, which is trying to overcome domestic opposition to a US$7.9 billion takeover bid from the Singapore Exchange .
In contrast, HKEx shares slumped on worries a round of mergers would intensify competition for the exchange, whose markets generate US$1.5 trillion in trading volume. The shares closed down 4.9 percent, the most since May 2009, on the highest trading volume since late 2008, Reuters data showed.
HKEx, which has a market capitalization of about US$24.4 billion, has so far felt no need to merge. Its position as a gateway to China for international investors and its strong pipeline of the Chinese mainland-backed IPOs has kept business booming.
Other exchanges in Asia have been reluctant to seek tie-ups due to tight ownership, while regulations in some markets, such as India, prevent significant foreign involvement.
"The competitive threat from alternative trading pools makes strategic sense for traditional exchanges to combine resources so they can compete better," said Neo Chiu Yen, vice president for equity research at ABN AMRO Private Bank.
