The takeover approach by the Hong Kong Stock Exchange for the London Stock Exchange (LSE) will reignite the debate about Chinese ownership of strategic western assets, but the LSE's own proposed acquisition of data business Refinitiv could stop the Hong Kong bid in its tracks.
Hong Kong is prepared to pay a staggering multiple of 42 times LSE's 2019 forecast earnings because stock exchanges are scarce assets with limited competition and tremendous pricing power. At the moment, the big discount to the bid price suggests that the takeover will not go ahead. I don't think this is a bad thing, as it will allow UK investors to continue to own a business that can grow in value over the long haul. In fact, the LSE has been a significant contributor to the performance of my Fantasy Sipp portfolio.