Australian Securities Exchange (ASX) Update

Submitted by Share Trading on 4 April, 2008 - 12:06

The Australian Securities Exchange (ASX) have an Outperform recommendation and a 12 month share price target of $50.46 from Australian sharemarket analyst Macquarie Research.

ASX: Where is it Heading?

Australian Securities Exchange (ASX) has been the subject of much scrutiny over the last 6 months given the extent of market volatility and credit market decline. The company successfully leveraged off the back of the last bull market and positioned itself as a key stock in the diversified financial space. On the 7th March the stock hit an 18 month low at $33.70 but has since rebounded 14.27% to date. Macquarie Research Equities (MRE) reviews the monthly trade data for ASX and reaffirms their guidance for the stock…

ASX: The Easter Period

With three fewer trading days in March, MRE stipulates that trade volumes were still strong with total cash market trades up 70% relative to pcp to $7.9m. The daily average trade volume was also higher at 415,886 up 97% on pcp – this is a reflection of the ongoing market volatility on both global and domestic markets.

ASX Sentiment Impacts Capital Raisings

Only 5 new listings were registered, an impact of subdued market conditions. Furthermore during the month $2.7bn of secondary capital was raised down from $8.6bn pcp; although the prior period was underpinned by the large transactions from Boart Longyear and Suncorp’s capital raising to fund the acquisition of Promina. It’s important to note that MRE have factored in a 38% decline in capital raising activity in 2H08, excluding Telstra which is expected to raise $6.6bn in late May.

ASX Supervisory Responsibilities Under Debate

There has been speculation about ASX losing supervisory responsibilities after considerable “media bashing”. Whilst MRE do expect modifications in the short selling space, they feel that it is unlikely that ASX will lose all of their supervisory responsibilities. Senator Nick Sherry recently commented on the role of ASIC and ASX deliberating that “any proposal to overhaul or merge the two was not a short-term or even medium-term priority”.

ASX Shares Action and Recommendation

MRE reaffirm their Outperform recommendation on the stock in the diversified financial space and maintain a 12-month price target of $50.46. They emphasise the recent weakness as an opportunity to enter an attractive investment into a quality franchise.