A merger between Singapore Exchange and ASX will make it harder for Hong Kong to win offerings by commodity companies and achieve an expansion plan announced this year, the chairman of the Hong Kong bourse said.

Should the Australian and Singaporean bourses merge, they would list a combined US$484.8 billion ($629.8 billion) of mining, chemical and energy companies, more than the US$390 billion offered by Hong Kong Exchanges & Clearing, according to data from the three companies. Getting overseas resource producers to list is a key part of Hong Kong Exchanges Chief Executive Charles Li’s three- year plan announced in March.

 

“Competition always makes the objective tougher to attain,” Ronald Arculli, chairman of Asia’s third-biggest bourse, 71, said in an interview in Hong Kong. “Hopefully, we’ll be able to build up some sort of critical mass.”

 

Initial public offerings by basic materials and energy companies reached US$24.2 billion globally this year, almost triple the amount raised in 2009, spurring competition between bourses. Hong Kong this year showed its intent to seize more of the market after United Co. Rusal, the world’s biggest aluminum producer, became the city’s first Russian listing.

 

Hong Kong Exchanges fell 1% to HK$177.30 ($29.7) at 10:50 a.m. Singapore Exchange rose 2.2% to $8.910, while ASX fell 2%.

 

Singapore Exchange offered about A$8 billion ($10.3 billion) in cash and stock on Oct. 25 for ASX in a drive to compete with Hong Kong and Tokyo. The combined entity would oversee two separate exchanges hosting mining companies BHP Billiton and Rio Tinto Group in Sydney and Wilmar International, the largest palm oil trader, in Singapore. China’s PetroChina Co., the No. 2 oil company, trades in Hong Kong.

 

“Singapore and Australia stand out stronger as they have more resources companies, and their combination creates synergy,” Danny Yan, Hong Kong-based fund manager at Taifook Asset Management, which oversees about US$400 million, said. “In terms of mining capital, Hong Kong stock exchange may not win.”

 

As many as 15 mining and natural resources companies may sell shares in Hong Kong in the next 12 months, according to a PricewaterhouseCoopers statement yesterday.

 

Hong Kong Exchanges’ Arculli said the bourse will probably look “at a broader range” of resource companies, and not concentrate on one market or one country.

 

“Our objectives remain unchanged,” he said yesterday. “It might mean that we have to work a little bit harder. We are a late comer to this particular sector, but so far, we’ve done reasonably well.”

 

Other than Moscow-based Rusal’s US$2.2 billion share sales, the Hong Kong bourse also won the listings for IRC, the iron ore unit of London’s Petropavlovsk Plc, and Mongolian Mining Corp. Resource companies raised more than $4 billion in Hong Kong this year, more than Australia, Singapore and Tokyo combined.

 

The biggest offering in Sydney and Singapore this year was the A$400 million IPO by Australian coal developer Aston Resources, data show.

 

“Hong Kong Exchanges has promising prospects, so it’s up to the competitors to come up with new objectives,” Dominic Chan, an analyst at BNP Paribas SA, said in Hong Kong.

 

Singapore Exchange’s merger with ASX has hurdles to overcome. Bob Brown, the leader of the Greens party in Australia’s parliament, said he won’t be supporting the takeover. Atsushi Saito, president of Tokyo’s stock exchange, said the merger will dilute the bourse’s almost 5% stake in Singapore Exchange to about 3.1%.

 

“There are still lots of uncertainties,” said Geoff Lewis, Hong Kong-based head of investment services at JPMorgan Asset Management. “They still need regulatory approval. It will be going on for a long time.”

 

That gives Arculli’s company time as it seeks to diversify its IPOs beyond Chinese companies, which included the Hong Kong tranche of Agricultural Bank of China Ltd.’s US$22.1 billion share sale this year. Combining the exchanges in Singapore and Australia will create a company overseeing about US$2 trillion of shares, still short of Hong Kong’s US$2.6 trillion.

 

OAO EuroSibEnergo, the power utility unit of billionaire Oleg Deripaska, is seeking a share sale in Hong Kong valuing it at US$8 billion, a person familiar with the plans said in August. Brazil’s Vale SA, the world’s biggest iron ore producer, has started its application to list depositary receipts in Hong Kong, Jose Carlos Martins, executive director of sales and strategy, said Sept. 29.

 

“The combination of SGX and ASX is a natural and inevitable development in regional capital markets,” Owen Hegarty, vice chairman of G-Resources Group, a Hong Kong-based mining company backed by BlackRock Inc. “As for Hong Kong, it will probably speed up its program to embrace greater resources company exposure.”