Could it be that one of the best ASX investment choices of them all is right here in front of you?
The ASX first listed back in 1998, listing with a share price of $4. Many brokers couldn't believe their luck when the ASX chose to list itself. The good news kept coming when it then merged with the Sydney Futures Exchange to form the Australian Securities Exchange, ASX Ltd (ASX: ASX).
Brokers thought they had the best share of all. They were impressed with its growth rate and flawless balance sheet. It was on its own with no competition – the ultimate combination of two monopolies – and by 2007, with the economy sailing downwind, ASX shares were trading near $60.
The GFC and a history of headwinds
The ASX share price naturally reflects the health of the total share market. When the Global Financial Crisis rocked the financial world in 2008, the ASX reacted, dropping in price to just over a third of its former value at $24.
But just as the Australian economy overcame the set back of the GFC, ASX shares recovered – only to face their next big hurdle, this time from the Australian Federal Government. Through the Australian Securities and Investments Commission (ASIC), the government had chosen to introduce competition to the ASX monopoly and issued licences to other entities to set up alternative securities exchanges.
Once again, the investor market got the jitters and the ASX share price fell, reflecting the potential threat this new legislation held. It was not to be, however and was very short lived.
Singapore's takeover bid sparks political action
When the Singapore Stock Exchange (SGX) proposed a takeover of the ASX in 2010, it valued the entity at $8.3 billion. The SGX was quite bullish about its offer and touted the fact that this union would create South East Asia's fourth-largest stock exchange.
After a great deal of publicity, the bid was ultimately not accepted thanks to federal Treasurer Wayne Swan who said in a statement at the time that it was 'no brainer' to reject the merger.
A decade later, the ASX is looking good
Today, ASX shares are trading at a price of $74 at the time of writing, down around 13% with the rest of the market amidst the COVID-19 panic. Until recently, it was priced at over $85 – not a bad gain, considering ASX shares first listed at just $4! Last year, ASX shares paid a franked dividend of $3.58 per share.
For investors, having ASX shares is like owning your own playground. What brokers initially called the 'best share ever' is still offering excellent gains and dividend returns. And it's right under your nose!
