Australia’s stock exchange has become the world’s most unpopular bourse among sell-side analysts after technical glitches prompted its longest shutdown in over a decade.
ASX Ltd. has zero buy ratings and 11 sells, giving it the lowest analyst consensus rating on both the S&P/ASX 200 Index and the 23-member Bloomberg Intelligence gauge of global security and commodity exchanges. Scrutiny of the company has intensified after the bourse’s hours-long outage last month added to existing operational woes.
Australia’s primary equity market opened for less than half an hour on November 16 before a software issue forced it to shut for the rest of the session. ASX Chief Executive Officer Dominic Stevens has apologized for the disruption and said the focus since the incident has been on ensuring system stability. This came less than a month after the company delayed the start of its new settlement program until 2023.
ASX earnings “may be pressured by spending on technology infrastructure after the recent system outage and a one-year delay to the expected launch of distributed ledger technology for clearing and settlements,” Bloomberg Intelligence analyst Sharnie Wong wrote in a November 27 note.
Other global exchanges have also experienced glitches and outages this year. The president of the Tokyo Stock Exchange resigned Monday after a malfunctioning data device brought on a full-day stoppage in October. In August, New Zealand’s stock market halted trading over four days as cyber attacks overwhelmed its website. Euronext NV and the Mexican bourse also faced October shutdowns.
Morgan Stanley sees additional risks to ASX’s valuation in the aftermath of the shutdown, noting that easy monetary policy is weighing on derivatives revenue. The stock trades at a forward price-to-earnings ratio of 31, the highest among the aforementioned exchange operators and pricier than the 20.5 times for Australia’s benchmark index. Shares rose 0.1% as of 10:55 a.m. in Sydney.
“ASX remains a quality business with potential to expand its revenue pools,” the broker wrote in a November 17 note. Still, its share price is “too dear given negative earnings growth and further headwinds from lower rates.”