After spurned play for LSE, Hong Kong bourse to seek deeper China embrace

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Hong Kong stock exchange boss Charles Li ignited his unrequited overture to the London Stock Exchange with a riff on Romeo and Juliet as a corporate romance, and doused it in a wistful blog reference to the author of ‘Alice in Wonderland’.After this week dropping the shock $39 billion approach, will Chief Executive Li’s next post outlining a strategic vision for the bourse swap British literary references for a metaphor from a Chinese classic?

Investors and analysts expect Hong Kong Exchanges & Clearing (HKEX) (0388.HK) to refocus its efforts – for now – on expanding its links with mainland Chinese counterparts following the collapse of its ambitions to build a global exchange platform via a merger with the London Stock Exchange Group (LSE) (LSE.L).

HKEX’s abortive approach was the largest withdrawn stock exchange-related mergers and acquisitions transaction ever, surpassing Deutsche Boerse’s (DB1Gn.DE) $13.9 billion approach for LSE in 2016, according to Refinitiv data.

“Charles Li must have known that the LSE was a long shot,” said Larry Tabb, founder and research chairman at U.S.-based capital markets advisory firm Tabb Group. “So I actually think the bid was meant to demonstrate his aggressiveness to Beijing and put him in a better spot in relation to Shanghai and other exchanges throughout China.”

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