Shares in the London Stock Exchange Group PLC (LSEG) went up 6 percent on Wednesday after Hong Kong Exchanges and Clearing Limited (HKEX) made a proposal to LSEG to combine the two companies. On Friday, LSEG rejected the takeover bid, noting that the company sees "no merit in further engagement.”

According to the LSEG, commercial considerations were the main reasons for its rejection of the proposal. LSEG said it is making progress in its proposed acquisition of data and analytics group Refinitiv, but the merger approach by HKEX at this time interrupts that process. Secondly, LSEG has concerns about the deliverability of the transaction because of the shareholder structure of HKEX; and what’s more is that LSEG is not satisfied with the price HKEX offered.

The takeover bid was one of the largest proposed business mergers in the last decade and required good timing and a good price for a deal to be reached.

However, the wording of the rejection by LSEG has attracted the attention of many as it reads: "We recognize the scale of the opportunity in China and value greatly our relationships there. However, we do not believe HKEX provides us with the best long-term positioning in Asia or the best listing/trading platform for China. We value our mutually beneficial partnership with the Shanghai Stock Exchange, which is our preferred and direct channel to access the many opportunities in China."

LSEG’s statement does not make a final determination about the status of Hong Kong as a financial hub. But its opinion is enough to stir reflection within Hong Kong’s financial sector. It not only shows the external views of the prospects of the two cities, but also shows the underlying logic of how they view Chinese opportunities.

Neither Hong Kong nor Shanghai is able to maintain their development potential without being a part of China. The prosperity of any Chinese city is based on its consistency with the national interests. From a business perspective, LSEG has no concerns about Shanghai, because the city is on the same page with China's policies and will benefit from rapid development of the country.

By contrast, violent protests and political groups advocating "Hong Kong's independence" are devastating Hong Kong's image and fueling suspicions about its financial stability. 

LSEG's compliment about the scale of the opportunity in China is a slap in the face to "Free Hong Kong."

Market expectation is an important factor in the financial industry. There are some people working in the financial sector who naively believe that the chaos in Hong Kong will only affect hotels and tourism and not the financial industry itself.

They believe that violent acts can only sabotage tangible assets like retail industries but that intangible capital flows cannot be damaged by the radical demonstrations. But LSEG’s rejection of the bid proves that it is superficial to underestimate the negative influence of the ongoing protests.

Hong Kong is very important to China as it is still the global offshore renminbi business hub, an international asset management center and risk management center. The city is part of a global business network and is one of the world's freest economies.

These advantages mean that Hong Kong is irreplaceable for China and will grow stronger in the future. Therefore, the central government regards Hong Kong as an economic powerhouse in the Guangdong-Hong Kong-Macao Greater Bay Area and encourages Hong Kong to have an intensified participation in China's development.

However, some people are still resisting Hong Kong’s integration into the national development. They cannot see the opportunities brought by the country’s development and are even hostile to mainland enterprises coming to Hong Kong. This is not only a short-sighted economic view but also an intolerant political view. 

Hong Kong and mainland enterprises could have fought for global competition together, which would bolster Hong Kong’s gateway role for Chinese mainland investments and consolidate Hong Kong’s advantages as an international trade center. The chaos in Hong Kong, which has lasted for more than three months, has made it clear for the world to see who is trying to stop the violence and restore law and order so that Hong Kong’s financial market can recover.

The central government has provided powerful and secure backing for Hong Kong over the last 22 years and will continue to support Hong Kong's economic development. Nevertheless, people in Hong Kong must work together to restore order to seize development opportunities.

(Compiled by Ryan Yaoran Yu and Da Hang)