Private credit might be less attractive than it was last year as investors rush into the market, but there are sweet spots to be found.
Francis Lim, president and CEO at the Philippine Stock Exchange, brought up the idea at a recent conference in Singapore organised by Citigroup Corporate and Investment Banking entitled Crossing Borders: Towards an Integrated Asean [Association of Southeast Asian Nations] Market The conference supporting cross-border cooperation among Southeast Asian markets was held in Singapore on 19-20 July.
Less than two hours after LimÆs suggestion, the first signs of a cohesive Asean exchanges organisation emerged, with executives from Bursa Malaysia, Jakarta Stock Exchange and Singapore Exchanges agreeing in principle to form the federation.
ôAsean has grown to 10 members and IÆve thought for some time that it be a good idea to form our own federation of stock exchanges to address issues relevant to Asean members, rather than Asia as a single entity,ö says Lim. ôObviously, further developments will be required to explore what can be done to realise the goal of a federation and to refine the concept.ö
Until now, the five major Asean exchanges (Bursa Malaysia, Jakarta Stock Exchange, Philippines Stock Exchange, Singapore Exchange, Stock Exchange of Thailand) had no formal ground to address the common issues they face.
All of them are members in larger stock-exchange confederations, but to date the only concrete Asean initiative has been the recent launch of the FTSE/Asean Index, comprising the regionÆs top 40 stocks in terms of capitalisation.
The five major Asean bourses are members of the Asian and Oceanic Stock Exchanges Federation. However, the presence of AsiaÆs largest exchanges, including Hong Kong Exchanges and Clearing, Korea Exchange and Tokyo Stock Exchange, means that Asean-specific issues are often dwarfed by the size and maturity of the more liquid exchanges.
Similarly, the World Federation of Exchanges serves as more of a forum to address global issues of governance and best practises.
Although in its embryonic stages, Lim envisages this proposed federation as being in line with the wishes of Asean finance ministers to make the regional organisation a stronger market by 2010, as well as a forum to discuss regulations, platforms and listings.
ôIt will hopefully serve as a harmonisation point for member exchanges, where listing rules, joint roadshows, disclosure rules, cross-border listings, dual listings and common trading platforms can be discussed in an exclusive arena,ö says Lim. ôThere is no common platform to address these issues and given the growth of Asean, it would greatly benefit not only the member countries but also investors in the member countries.ö
The planned establishment of a federation of Asean exchanges would also likely benefit some of the organisationÆs newest members, particularly Vietnam. As the countryÆs stock exchange has only existed for five years and it has several major privatisations in the pipeline, Lim also believes that the suggested alliance could greatly assist in VietnamÆs development as AseanÆs sixth major exchange and help its development as a serious stock market.
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