Consolidation of major stock exchanges has become a strong trend recently. Even the mighty New York Stock Exchange and Nasdaq are going for mergers. Obviously, being "kiasu", Singapore never wants to lag behind. A SGX-ASX merger is looking increasingly likely by the day. Critical mass and economies of scale that result from the ASX-SGX merger would potentially provide a highly efficient international capital market linked to the vibrant economies of South Asia, and provide a gateway for Australian business to Asia and the rest of the world.
In this post, I will be suggesting 3 ways to position or re-position one's portfolio to benefit from the very possible SGX-ASX merger in the second half of 2011.
1. Focus on SGX-listed companies which have good, solid businesses in Australia. E.g. Singtel (Telecommunications) and Noble Group (Commodities/Resources)
2. Focus on SGX-listed blue chips because the Australian investors and fund managers will probably load up on them once the SGX-ASX merger is approved.
3. Focus on SGX component stocks because they will probably be the first to rise if the merger goes through as funds and retail investors from Australia enter the Singapore market.
Of course, for my lovely Australian readers, all of you just need to apply the above-mentioned ways on the ASX because Singaporean investors and funds will be entering the Australian market too. ^^
I admit I am no expert. There are probably more effective ways of positioning one's portfolio for the merger. There might be a difference positioning a "Singaporean" portfolio compared to an "Australian" one.
Please feel free to post your comments and suggestions below. =)