Should you buy ASX shares? Here is why the bourse thinks you should

Nick Sundich, June 7, 2023

When we titled this article ‘Should you buy ASX shares?’ we are not talking about ASX stocks generally, but shares in the bourse itself. Yes, the ASX (ASX:ASX) is a listed company in its own right. And today (Tuesday June 6 2023) it held an Investor Day where it put forward arguments as to why investors might consider buying ASX shares.

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Should you buy ASX shares?

The bourse has a near-monopoly position in the Australian share market, at least for now. It is the world’s 8th largest securities exchange and has $2.8tn worth of companies listed there.

And it has told investors that it has several strong tailwinds that present opportunities. It noted the continued growing pool of capital with a 20-year growth rate of 11.3% – thanks to compulsory superannuation. And given that exchanges are data rich, there’s opportunity to leverage data across business models, asset classes, products and services.

But expectations are high

However, the ASX is under high scrutiny because of its inability to deliver the long-promised replacement to its CHESS system. Having previously anticipated it could go live this year (nearly 3 decades after CHESS was implemented and nearly 8 years of work), it now anticipates keeping it until the early 2030s. It has faced scrutiny from investors, as well as from ASIC.

Nonetheless, you may want to buy ASX shares. It told shareholders it had the roadmap defined and had not canned the project completely. And in the interim, shareholders could still look forward to dividends and growing revenues (as it remained a popular exchange for new listings), even though it would cut the payout ratio from a fixed 90% of EPS to a 80-90% range.