EMAILED ON September 12, 2019 BY Conor Grant

In a strange exchange, Hong Kong’s stock exchange bids $36.6B for London’s exchange

Vernon Yuen/NurPhoto via Getty Images

Yesterday, the owner of the Hong Kong Stock Exchange made a $36.6B offer to buy its European peer, the London Stock Exchange.

If the deal were to go through — and that’s a BIG if — the merger would produce an economic giant that would span Europe and Asia at a time when economic outlooks on both continents are increasingly uncertain.

So, why would either exchange do this?

The Hong Kong Stock Exchange has traditionally seen plenty of investment thanks to its status as a “bridge” between Western markets and Chinese companies. 

But recent trade tantrums on both sides of the Pacific (and protests in Hong Kong) have led to a slowdown in trading in Hong Kong — and a British boost could strengthen the Asian exchange.

In London, it’s a different story: The city’s traditional status as a global financial hub is in jeopardy thanks to Brexit — but a partnership with Hong Kong would tie the renegade European capital to a number of booming businesses in Asia. 

Now, the London Stock Exchange has to make a big choice

To get the mega-merger off the ground, the London Stock Exchange would likely have to scrap the $27B acquisition of the financial data company Refinitiv that it agreed to less than 2 months ago. 

Now, the European exchange is left with a choice…

Option A: Proceed with the Refinitiv deal 

  • Opportunity? Gain a foothold in the growing market data industry
  • Risk? Divert resources from its core market exchange

Option B: Abandon Refinitiv and merge with Hong Kong Stock Exchange 

  • Opportunity? Expand its market access across Asia
  • Risk? Lose some localized control over its exchange