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Exchange merger under scrutiny

By Chris Hutching

Friday 30th June 2000

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Stock Exchange chairman Eion Edgar has confirmed a merger with the Australian Stock Exchange is still possible but says it may not be the solution to poor stock performance.

More details about the exchange's future options will be revealed when the annual report is issued next Monday. It will contain the findings of former board member Jon Cimino of Warburg Dillon Read. Mr Edgar said many commentators confused the exchange's performance with share prices. It was already a world leader in efficiency and settlement of transactions. But other structural differences made comparisons inappropriate.

These included the lack of a national savings scheme which underpins the markets in Singapore and Australia. New Zealand companies also paid dividends averaging 8% compared with 1% in the US where investors had higher expectations of share price rises.

Mr Edgar said Australian investors already had the ability to tap into kiwi stocks through dual listings but there was little evidence investors were rushing to buy into them.

There appeared to be no clear model of what would be most successful. Most of the international mergers occurred only in the past six months and it was too early to judge the effect. The key question remained - whether merging would benefit members, investors or companies, Mr Edgar said.

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