Hong Kong takes a hike

TheRe are few institutions which have been so redoubtable in their determination to set their own destiny as the London stock exchange.

Over the last couple of decades it has resisted takeover bids from every continent. After each affray it has come back stronger with the share price up.

the aborted £32bn bid from the hong Kong stock exchange (hKeX), the owner of the London Metal exchange, looked dead on arrival and so it has proved. chief executive charles Li’s attempt to sweet talk the Lse, key investors and regulators into submission fell on stony ground.

even if hKeX had managed to hike the price and increase the cash element by taking on more debt, it still would have been doomed.

there was no way that the regulators were going to allow a hong Kong- controlled enterprise to get its hands on the Lseowned London clearing house.

In the post-crisis era, much of the world’s trillions of dollars in derivatives trading moved from globally significant banks to platforms such as the Lch where regulators could keep better tabs on transactions. In better times a link-up between hong Kong and London might have made sense. But the current unrest and the apparent opposition of the government in Beijing to the deal made the geopolitics impossible.

china has been anxious to empower shanghai as an alternative to hong Kong, and the Lse already has an arrangement with that exchange. It would be crazy for the UK to alienate Beijing over this at a time when the city is becoming the great locus for international trade in the chinese currency, the renminbi.

the hKeX offer was the first test of resolve for the new American team at the top of the Lse: chairman don Robert and chief executive david schwimmer.

they were moved into the hot seats after the 2017 merger proposal from deutsche Boerse was blocked by eU regulators. But the hong Kong bid is not dead and buried.

Under takeover rules it could come back in six months, perhaps with revised terms. that seems unlikely in that hKeX made its offer dependent on the Lse cancelling the proposed takeover of Refinitiv, which is due to complete next year.

No one should discount the post-Brexit value in the UK deepening its financial ties with Asia as an alternative to slow-growth europe. the Prudential, hsBc, standard chartered and others have demonstrated the upside of looking to the Pacific as the old hongs, swire and Jardine Matheson, did in an earlier age.

One of the paradoxes is that some of hong Kong’s chinese tycoons, notably Li Ka shing, have chosen to hedge their hong Kong bets by investing in the UK, controlling vital assets such as europe’s biggest container port at Felixstowe, as well as water utilities. In calmer times deepening financial ties between hong Kong and postBrexit Britain would have real value.

Paper tiger

Sir Martin sorrell was an early enthusiast for digital advertising but never managed to make the full transition when at wPP.

Freed from that burden, the 74-year-old ‘good leaver’ is not letting the grass grow under his feet at his new outfit s4 capital. his latest £123m purchase, Firewood, is a silicon Valley digital agency.

Among clients are Facebook, Google and salesforce. Quite an impressive list. As was the case when he built wPP, sorrell is using old-fashioned paper, in the shape of a stock market placing, to fund his purchase.

the agency may be focused on the digital market but his use of shares, rather than debt, to finance expansion shows investors trust him to sprinkle some stardust.

Quiet man

Regretfully, I can claim no inside track as to who the next governor of the Bank of england will be, as chancellor sajid Javid is playing this close to his chest.

the idea that Javid is seeking a third extension to Mark carney’s stay makes sense, with Brexit still unsettled.

Boardroom moves by others in the frame, including sir John Kingman at L&G and Brexiteer helena Morrissey – who is leaving L&G – are a source of new speculation.

Anyone digging deep into david cameron’s memoirs might fancy a flutter on the Bank’s respected deputy governor, Jon cunliffe, who was dispatched as UK envoy to Brussels to keep a ‘sceptical’ eye on the eurocrats’ handling of economic issues.

Intriguing.