The Hong Kong Stock exchange made a surprising announcement Wednesday, saying that it had put in a £32bn bid for the London Stock Exchange.
The owner of the London Stock Exchange, LSE Group just recently announced that it would be buying Refinitiv for £22bn which would rival Michael Bloomberg’s business.
The news of the bid led to a 15% jump in the London Stock Exchange Groups’s share price, but this quickly reversed later in the day.
If it were to go ahead, the two exchanges would be the largest financial centres in Europe and Asia, however in order to make the acquisition, the LSE would have to scrap its plans to buy Refinitiv.
However, it is unlikely that the bid will be accepted as the offer was considered to be highly political and sensitive given that it would mean a key asset of Britain’s financial services sector would be handed over to China in such an acquisition.
Back in 2017, a proposed merger with Deutsche Boerse and the LSE was rejected by EU regulators, saying it would have created a monopoly of financial services in the bloc.
With the UK’s departure from the European Union, its financial centre will not face the same regulatory hurdles, however outside the common market, passporting rights would be revoked immediately causing widespread financial problems across the global banking system. It is unclear how this issue will be resolved but may be one of the key areas the UK and the EU will have to address before any deal or no-deal Brexit occurs.
