HKEX Bid For LSEG, finnCap View: HKEX’s Bid For The LSEG Is A Bold Move That Surprised Markets But Perhaps On Reflection Is Not As Startling As At First Glance

HKEX bid for LSEG, finnCap Group view, CEO Sam Smith said:

“HKEX’s bid for the LSEG is a bold move that surprised markets but perhaps on reflection is not as startling as at first glance. There is a clear strategic logic for the deal as it would ensure that the LSEG benefits from the growth opportunities in Asia and plays a leading role in the renminbi becoming a major global reserve currency. Balancing this, however, is the exciting potential of the LESG’s proposed tie-up with Refinitive and the boost this would give the LSEG’s ability to monetise market data, which is a key goal of all major exchanges.

Certainly the deal has the potential to reinforce the City’s global profile, as it brings together the largest and most significant financial centres in Asia and Europe. Whether it will, likely involves broader considerations. The LSEG’s efforts to merge with the Deutsche Boerse were ultimately trumped by political factors, which could come in to play here too.

If the deal does go ahead, one clear priority should be to safeguard AIM. Last year AIM was responsible for 59% of the funding secured by growth companies across European bourses, raising £5.5billion across 398 separate deals, which compares well with £17.7 billion for the entire main market in London. Furthermore, there were 42 IPOs on AIM in 2018 raising £1.6 billion for growth companies and the market continues to play a vital role in helping scale-up businesses access the funding they need for growth.

Whatever the outcome of the bid itself, it is at least a sign that UK companies remain attractive, show Brexit is not an issue on the wider international stage and confirms that the UK remains open for business.”