Shanghai will be the long-term financial centre in China, according to the London Stock Exchange Group (LSEG) chief executive, as Hong Kong Exchanges & Clearing (HKEX) continues its pursuit of the UK exchange group.
David Schwimmer, CEO of LSEG, told delegates during a keynote interview at the Sibos conference in London that despite Hong Kong’s strong position in the global financial markets, he views Shanghai as the long-term hub for markets in China.
“I think if you look at the transformation of China over the past 15 or 20 years, it has been extraordinary,” Schwimmer said. “We view the capital controls around the Chinese market as constantly evolving, and the trend is that they are slowly but surely being removed. We see that as the inevitable path and we’ve invested in this through our relationships with the Shanghai London Stock Connect. We don’t take short-term perspectives… we view Shanghai as the financial centre in China.”
Schwimmer’s comments follow a surprise bid from HKEX to acquire the LSEG for £32 billion earlier this month, which the LSEG board unanimously rejected, stating that it sees no merit in further engagement on the issue. The failed offer from HKEX also relied on LSEG pulling out of its own mega-merger with data and trading services provider Refinitiv for $27 billion.
Immediately after Schwimmer’s interview, HKEX chief executive Charles Li took the stage for an interview, making the case for both exchange groups to explore the merger more seriously. Li told delegates that as the world becomes more polarised between the east and the west, the world needs a markets infrastructure that can underpin both of those centres of gravity.
“The idea that China will relax its capital control will continue to be talked about for the next 20 years,” Li said. “The are great planners of economy and affairs, but have challenges dealing with outsiders because they don’t want to give up their standards.”
“[Schwimmer] seems happy with the relationship that LSEG has with Shanghai, but that has only been in place since June. Our idea with this transaction is a simple vision, but a big dream. We would create a rival infrastructure that is unrivaled across asset classes, across currencies and across time zones. Together, we complete each other.”