Economy

Hong Kong Stock Exchange unveils shock pound sterling32bn bid for London rival

Hong Kong Stock Exchange unveils shock pound sterling32bn bid for London rival

The Hong Kong stock exchange has tabled an audacious £30bn bid for the London Stock Exchange that has sent shockwaves through financial markets, and could pose a political headache for the Government.

Shares in the London Stock Exchange Group surged by more than 15% after the offer was announced.

The HKEX says the move would strengthen both organisations and "create a world-leading market infrastructure group with a global footprint, diversified across asset class, ideally positioned to benefit from the evolving global macroeconomic landscape, connecting the established financial markets in the West with the emerging financial markets in the East, particularly in China".

The Refinitiv deal was a bet by LSE on a future dominated by data, as the three-century-old exchange looks for ways to extend its global reach.

In terms of future governance, HKEX says it has begun conversations with certain regulators in the United Kingdom and Hong Kong and looks forward to discussing the transaction in detail with LSEG and all relevant regulatory bodies.

"It's a bold move and one that appears to have a low chance of success".

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"This is an initial shot, however".

An HKEX-LSE pact would put an end to the Refinitiv purchase, instead creating a global trading power that would have stock, derivatives and commodities exchanges, as well as clearinghouses across two continents.

"In addition, the very nature of the Hong Kong approach will be subject to any number of considerations, such as competitive and regulatory issues".

Hunter noted the fact that part of the proposal requires the LSE to back away from its recent deal to acquire Refinitiv, saying this appears to be an early stumbling block.

"The proposal is a fascinating prospect but far from a done deal", Hunter said. Visit MarketWatch.com for more information on this news.