Charles Li connected Hong Kong and China but the LSE agreement could be a bridge too far

Mr. Li, 58, is a former lawyer, banker, journalist and volunteer oil worker. For much of his long-time tenure as Director General of

Hong Kong Stock Exchanges and Clearing
Ltd.

he focused on strengthening the links between the stock market and his counterparts in mainland China and focusing on growing China's global wealth and influence.

On Wednesday, Mr. Li sought to sell to the media the benefits of the Hong Kong and London stock exchanges within a group providing for an 18-hour trading day, as part of a series of negotiations. an agreement that would deepen the ties between China and world markets.

Speaking from a London office located a short walk from the LSE headquarters, he admitted to admiring it for months and described the saga as a business history "Romeo and Juliet" – a typically colored phrase.

"He is a very successful salesman," said

Christopher Cheung Wah-fung,

Legislator in Hong Kong who represents the financial services industry and is also managing director of Christfund Securities, a brokerage firm. "He still has a lot of plausible theories to defend his arguments."

HKEX did not make Mr. Li available for comment.

The LSE proposal, the most recent of a long series of transaction acquisitions involving UK-UK trade, immediately fell into skepticism. "It's a bold decision that seems to have little chance of succeeding," said

Neil Wilson,

analyst at Safecap Investment Ltd.'s Markets.com.

Li spent a decade talking about the opportunities offered by the two-way internationalization of Chinese capital markets. Partnering with LSE could be the biggest step in achieving this vision, according to someone close to him.

One of the hurdles will be to persuade the target company's board and its shareholders to forgo LSE's $ 14.5 billion deal to buy financial information provider Refinitiv Holdings Ltd.

Foreign exchange transactions often also involve political risks. The British government could veto this deal because LSE is an essential part of the country's financial infrastructure, according to people familiar with the subject.

At the same time, Hong Kong's financial community is worried about Beijing's increasing encroachment on the territory, which has fueled months of increasingly violent protests. Half of the board members of the Hong Kong Stock Exchange, excluding the Managing Director, are appointed by the Hong Kong government, which could potentially increase sensitivity.

HKEX shares sold 3.5% on Thursday as its own investors digested the deal.

Mr. Li debuted as an offshore oil worker in mainland China before entering the university. He worked for a few years as a journalist for China Daily, a spokesman for the state, and earned a master's degree in journalism from the University of Alabama.

He rotated again and earned a law degree from Columbia University. He worked in law firms in New York before joining Merrill Lynch China in 1994, where he became president in 1999. He joined JP Morgan China as president in 2003.

Unlike many Western stock exchanges, HKEX faces low competition in its domestic market for equity trades, futures and clearing, and is therefore very profitable. This means that he has felt less pressure than his European or American rivals to diversify into areas such as index compilation, or to gain momentum through acquisitions.

The only notable acquisition abroad took place in 2012, when she bought the London Metal Exchange for $ 2.12 billion.

This constraint has borne fruit so far. Since Mr. Li took the helm in January 2010, the company's equity gain has more than doubled compared to the Hang Seng benchmark. The group has a market value of about $ 38 billion, according to FactSet.

Instead, Mr. Li focused in part on creating links between mainland China and global markets. The stock market set up Stock Connect in 2014, a trade link giving foreign investors access to Shanghai and Shenzhen shares, and allowing investors from across the continent to trade in Hong Kong.

By facilitating the buying and selling of onshore shares, the program has persuaded influential index providers to add Chinese stocks to their benchmarks. He also chaired a similar program called Bond Connect.

The exchange has also moved to remain competitive. It was the largest market in the world for last year's IPOs. With Li's support, the city reorganized its registration rules in 2018 to allow companies with unequal voting rights and unprofitable biotech companies to be made public.

However, Cheung, the lawmaker, said some of Li's initiatives had not yet paid off. "I do not see any real benefit for Hong Kong through the LME agreement or efforts to bring back the Chinese technology companies listed in the United States," he said.

Write to Steven Russolillo at [email protected] and Stella Yifan Xie at [email protected]