Thursday 26 September 2019 6:50 am

DEBATE: Does the Hong Kong Exchange boss have any chance of winning over LSE shareholders?

Benedict Spence is a freelance writer. He is on Twitter @BenedictSpence
and David Buik
David Buik is a market commentator at Core Spreads.

Does the Hong Kong Exchange boss have any chance of winning over LSE shareholders?

YES, says Benedict Spence, a freelance writer.

The Hong Kong Stock Exchange’s takeover attempt may not sit well with some elements of the city, nor with some in Westminster, but at a time of insecurity over the future of the nation’s financial industry, it is a ringing endorsement in the London Stock Exchange’s (LSE) future prosperity. 

Brexit is edging closer, and with it comes opportunities to break away from the sluggish EU. One cannot talk up trade and business with the rest of the world and go calling for international investment in the UK, only to run away when presented with an impressive £32bn bid like this. 

This latest charm offensive from the Hong Kong Exchange boss should remind London that Asia is the future – not just China, but the south east too. Hong Kong would open up a window to the possibilities that emerging economies like Vietnam present. 

The UK and Hong Kong have had a long, complicated relationship. But in the end, this is not up to the government but to the LSE shareholders, who may well prioritise economics over politics.

NO, says David Buik, a market commentator at Core Spreads.

In the past decade or so, the LSE has been regarded as succulent prey by Sweden’s OMX, NASDAQ, NYSE, Dubai, and Deutsche Boerse. 

All overtures have been rejected so far – and in that period, especially under the innovative leadership of Xavier Rolet,  its share price has risen from circa £5 to £71. 

Now the chief executive of the Hong Kong Exchange, Charles Li, is on a charm offensive to persuade LSE’s shareholders to acquiesce to the current £32bn bid, and has coerced HSBC and UBS to join in.

LSE chief executive David Schwimmer, who took over from Rolet in 2018, has been instrumental in acquiring Rifinitiv for £22bn and leading the Exchange in a positive direction. His attitude suggests that he will hold the line and reject any deal – and he would be right to.

London is a preeminent financial hub, with first-rate business infrastructure, in a central global time zone. Shareholders may be tempted by this overvalued bid and the smell of “filthy lucre”, but they should have the sense to resist.

Main image credit: LEON NEAL/AFP/Getty Images

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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