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