The London Stock Exchange Group’s rejection of a takeover proposal from Hong Kong Exchanges & Clearing shows that there are doubts around the world over Hong Kong’s development potential, according to a People’s Daily commentary.
LSE’s letter to HKEX, which says its partnership with the Shanghai Stock Exchange is its “preferred and direct channel to access the many opportunities with China,” illustrates how the world views the prospects between the financial centers of Shanghai and Hong Kong, the mouthpiece of the Chinese Communist Party said late Saturday.
There is confidence in Shanghai’s growth potential, compared with “persistent worries” of Hong Kong amid violence and calls for the city’s independence, the paper said. Mass marches in Hong Kong opposing legislation on easing extraditions to China began peacefully in June, but have since widened into a broader movement against Beijing’s increasing grip and frequently boils into violence.
The People’s Daily commentary suggests a lack of support from Chinese officials for HKEX to take over LSE, adding another hurdle for the Hong Kong company to overcome. The paper also took a jab at protests in the former British colony, saying the demonstrations have reduced the city’s international allure.
The Chinese newspaper questioned the resistance of some parties in Hong Kong in leveraging on the mainland’s economic clout.
“Some people in Hong Kong still have a negative view toward integrating into the development of the nation as they don’t see what opportunities it brings to Hong Kong,” according to the commentary. “This doesn’t only show how short-sighted it is from an economic perspective, but also how narrow-minded from a political perspective.”
A spokesman with HKEX said there is no immediate comment on the People’s Daily’s article.
LSE on Friday rejected the takeover proposal from its Asian rival, saying the bid had “fundamental flaws.” The board of the British bourse said HKEX’s approach on Wednesday had problems in its “strategy, deliverability, form of consideration and value.”
HKEX is ready to make the case for the 29.6 billion-pound ($37 billion) takeover directly to investors. HKEX said on Friday that LSE shareholders “should have the opportunity to analyze” the proposal in detail.