Shares in the operator of the Hong Kong stock market dropped a day after it made a £32bn takeover bid for the London Stock Exchange, in a transaction that is expected to be rejected in the face of pushback from investors and regulators.
By early afternoon in Hong Kong, stock in Hong Kong Exchanges and Clearing fell 3.4 per cent, wiping more than $1bn in value from the company.
HKEX stunned investors when it made the unsolicited bid for the LSE, one of London’s highest-profile financial institutions, on Wednesday. The HKEX proposal values LSE shares at £83.61 each, or a 23 per cent premium to their closing price on September 10.
HKEX has said that the deal would combine “the largest and most significant financial centres in Asia and Europe”, but investors expect that it will face significant political hurdles and questioned the structure of the deal.
The LSE is in the process of its own blockbuster deal, as it moves to acquire data and trading group Refinitiv in a $27bn purchase that is awaiting shareholder approval.
The HKEX bid comes amid a deepening political crisis in Hong Kong, where the government — the biggest shareholder in the bourse — is grappling with months of protests that have turned increasingly violent. Millions of pro-democracy protesters have taken to the streets since June, raising questions about the viability of the “one country, two systems” model under which Hong Kong has operated since the handover of the territory from British to Chinese rule in 1997.
“Through the Hong Kong government, Beijing controls the exchange here and lists vasts amounts of stateowned enterprises on it,” said David Webb, a Hong Kong-based activist investor who was an independent director on the HKEX board until 2008.
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