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Chinese Expansion: Hong Kong Stock Exchange Provides 35 Billion Euro for London LSE


The financial centers of London and Hong Kong could come closer together: the stock exchange in the Chinese Special Administrative Region wants to merge with LSE. In 2017, the Frankfurt Stock Exchange had already failed with a takeover.

The Hong Kong Stock Exchange is interested in the London stock exchange operator LSE. The Hong Kong Exchanges and Clearing (HKEX) made a takeover bid to the LSE with a total volume of 31.6 billion pounds (equivalent to around 35 billion euros).

However, a transaction is subject to the condition that the takeover of the data service provider Refinitiv by the LSE announced at the beginning of August will not materialize, HKEX announced. The deal between former refiners Blackstone and Thomson Reuters and the LSE is currently under review by antitrust and financial regulators in the US, the European Union and other countries. The LSE said it would stick to its refining plans and make good progress.

A merger of HKEX and LSE would create a global leader among stock market operators, said the Hong Kong-based group. The transaction also promised high synergies. For example, HKEX aims to integrate its trading platforms into the London system. A transaction would be in the interest of all shareholders.

Commitment to both stock exchanges

HKEX pledged long term to both Hong Kong and London exchanges and plans a secondary listing of its shares in the British capital.

The LSE wants to examine the plans, it said in a statement. The Hong Kong Stock Exchange called the stock exchange operator "unsolicited and provisional". Investors took to the announcement of the plans for the shares to: The LSE securities shot up by up to 16.4 percent in the amount.

The Hong Kong stock exchange operator examines thereby according to own data already for months a possible assumption. HKEX had already bought the London Metal Exchange in 2012 for £ 1.4 billion. The LSE was already involved in the merger: A merger with Deutsche Börse failed in 2017.

Ronald Wan, head of investment advisor Partners Capital International in Hong Kong, sees major challenges in the deal - especially political ones. Hong Kong is a special administrative region of China. A takeover of LSE by HKEX could also be seen as a takeover by China. A transaction is politically "super sensitive".

British Economy Minister Andrea Leadsom told Bloomberg TV that the government is looking closely at any merger between exchanges. Above all, one would look very closely at anything that could have security implications for Britain.

Source: spiegel

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