Shares of Singapore Exchange <SGXL.SI>, Asia’s second-largest listed bourse operator, rose as much as 3.2% in morning trade on Wednesday on short-covering after news of a possible takeover spurred selling of the stock.

At 0315 GMT, SGX shares were trading up 1.6% at $8.86 on a volume of 11.3 million shares.

“The selldown is overdone for such a short period of time. The short-covering may continue for one more day but it depends on the outcome of the talks,” said a local trader.

 

On Monday, SGX had agreed a US$8.3 billion ($10.8 billion) takeover of Australia’s ASX <ASX.AX> to create Asia’s fourth-largest stock exchange, aiming to cut costs and fight growing competition.

 

But the deal requires regulatory approval and Australia’s government has promised exhaustive scrutiny.

 

Singapore Exchange shares had fallen on news of the deal on fears that it was paying too much for the proposed acquisition.