By Chris Oliver, MarketWatch
HONG KONG (MarketWatch) — Shares of Hong Kong Exchanges & Clearing Ltd., operator of the city’s stock and futures exchanges, rose on Monday as investors assessed an upbeat outlook brought on by rising fund flows, new product offerings and a healthy pipeline of new listings.
The gains came as Singapore Exchange Ltd. /zigman2/quotes/206876763/delayed SG:S68 -0.76% /zigman2/quotes/205167400/composite SPXCY -1.75% announced it was buying its Australian counterpart ASX Ltd. /zigman2/quotes/205682473/delayed AU:ASX -1.78% /zigman2/quotes/208455670/composite ASXFY -4.71% , with a number of reports on the deal also highlighting the Hong Kong bourse’s strong presence in the region. See report on Singapore Exchange’s purchase of ASX.
Singapore Exchange bids for Australia's ASX
Singapore Exchange Ltd. made a friendly offer to buy all of ASX Ltd., the operator of the Australian Securities Exchange.
Analysts said it was unlikely the Singapore-Australia market merger would dent the attractiveness of Hong Kong as a preferred destinations for IPOs owing to its proximity to the China market and ample liquidity.
“It may accelerate listings by Chinese companies, which would increase the overall valuations of the Hong Kong exchange,” said research director at Cinda International in Hong Kong, Castor Pang.
HKEx /zigman2/quotes/200234512/delayed HK:388 -1.36% /zigman2/quotes/201215503/composite HKXCY -1.71% , whose biggest-ever initial public opening, American International Group Inc.’s /zigman2/quotes/203700638/composite AIG -3.18% AIA Group, will begin trading shares on Friday, is on track to finish 2010 as the world’s top market in terms of IPO funds raised for a second straight year.
China International Capital Corp., a brokerage with offices in Hong Kong, said it had upwardly revised HKEx’s average daily market turnover for 2010 to 65 billion Hong Kong dollars ($8.38 billion) from HK$60 billion. Daily turnover could surpass HK$80 billion if the exchange adopts changes recommended in a consultation paper to extend its daily trading hours to 5.5 from 4.
“Longer trading hours will definitely make trading more frequent intraday,” CICC said in a note earlier this month.
The broker said it lifted its 12-month price target on HKEx to HK$200 per share, owing to the prospects of rising turnover.
HKEx ranks as the world’s most valuable stock-market operator in terms of market capitalization.
Goldman Sachs is upbeat on HKEX, with Reuters reporting the bank as issuing a 12-month price target of HK$221 on the shares, with compares with its Monday afternoon trading price of HK$182.10.
The broker was quoted as saying it expects the HKEx to benefit from the further fund flows into Asia, rising investor confidence and new product introductions.
Turnover is also expected to get a boost from the range of new investment products to tap the surge in yuan deposits in the city’s banking system, as Beijing adopts further steps to liberalize trading in the currency.
Potential new products include trading in yuan-denominated shares. The HKEx currently supports trading in shares denominated in the Hong Kong dollar, which is pegged to the U.S. dollar.
Credit Suisse said in a note Monday the prospect of additional quantitative easing by the Federal Reserve in November means the surge in foreign fund flows into Asia will likely continue.