Shadow Treasurer Joe Hockey has accused federal Treasurer Wayne Swan of bungling in his rejection of a deal to merge the Australian and Singapore stock exchanges.
Mr Swan has announced that the proposed merger would not be going ahead, after informing the Singapore exchange earlier in the week that he was likely to reject it, AAP reported.
Fears of fallback
Australia's attitude could see the ASX fall behind its peers, analysts say, amid the climate of stock exchange consolidation, according to AFP.
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Last week, the Nasdaq and Intercontinental Exchange joined forces to make an $11.3 billion bid for NYSE Euronext, while the London Stock Exchange has proposed merging with the Toronto bourse.
Matt Robinson, a senior economist at Moody's, said the decision "generates a potentially toxic degree of sovereign uncertainty regarding future merger and acquisition activity involving Australian companies".
"Using Treasurer Swan's rather eloquent wording, the only 'no-brainer' in this instance is the damage done to Australia's reputation as a destination for foreign capital."
Swan said the Treasury, the Reserve Bank of Australia, and the Australian Securities and Investments Commission were all concerned about regulatory oversight when it came to SGX's bid.
"It is important that we continue to build Australia's standing as a global financial services centre in Asia to take best advantage of the benefits of our superannuation savings system," he said.
"I had strong concerns that the proposed acquisition would be contrary to these objectives."
Swan received the support of the Stockbrokers Association, reports the ABC.
"We didn't understand the opportunities that would be presented to Australian brokers and their clients in terms of trading," the network reported senior executive Doug Clark as saying.
"We didn't understand how capital raising opportunities would be made easier or cheaper - that wasn't all that well set out in the documentation," he said.
Bungled process
Meanwhile, Mr Hockey did not criticise the decision, but the process of announcing it.
"This has been a bungled process," he said.
"Wayne Swan has turned Australia's international reputation into that of a third world country.
"His bungled decision-making process has reflected poorly on Australia in what has been a complex commercial process," he told reporters today.
Mr Hockey said Mr Swan had said only a few days ago that he had not made a final decision, but information printed in Thursday's Australian Financial Review had made it clear that he had briefed the newspaper about the justifications for his final decision.
"The process itself rather than the decision has reflected poorly on Australia's international reputation. It has increased our sovereign risk," he said.
Mr Swan's decision to leave the way open for a possible future merger had only "added to the confusion", Mr Hockey said.
He said he did not have access to a 1000-page document that was lodged to the Foreign Investment Review Board, and Mr Swan had not publicly released information about the proposed deal.
"That means we are not in any position to make a final statement about this," Mr Hockey said.
"Let me be clear, this was not a merger but a takeover and from our perspective we are always constantly looking for good foreign investment that enhances Australia's reputation.
"But it has been the process that has been flawed throughout this deal," he said.
