Three months into the worst crisis to grip the former British colony since it was handed to China in 1997, Hong Kong Exchanges and Clearing made the surprise proposal on Wednesday. Sources close to the matter told Bloomberg the LSE board is wary of the potential influence of Beijing on the HKEX, which counts the Hong Kong government as its largest shareholder. Members are set to gather in the coming days to discuss the surprise offer, which they are likely to reject, according to two sources who spoke to The Financial Times. 

LSE investors are said to be keen to see the proposed deal with Refinitiv go ahead, the $27billion acquisition of the data and trading group. 

The exchange is said to be in favour of focusing on executing this deal rather that risk it being scrapped by the HKEX. 

On Wednesday the LSE said in a statement that it remained committed to the Refinitiv deal. 

When asked about the HKEX bid, business secretary Andrea Leadsom said that while the Government is “always keen to see foreign direct investment” it would have to treat with caution any offer “that potentially had security implications” for the country. 

Fitch Ratings said concerns over data and information security would be high in the US and the UK due to the “increasing control by Chinese authorities over Hong Kong”. 

In June, protests kicked off in the former British territory over legislation that would have drawn Hong Kong closer to the Chinese legal system. 

READ MORE: Hong Kong Protests: GUNFIRE on streets – China’s army deployed

Sources said a deal could be be pushed back by American and British officials citing security concerns. 

But Neil Wilson of Markets.com said it is unlikely to ever see the light of day as there is scant appetite in the British government to see the LSE controlled by China. 

He said: “The UK government may not wish to see such a vital symbol of UK financial services strength, and indeed a strategic asset, to be owned by foreigners; effectively it would hand it over to the Chinese through the Hong Kong back door. 

“For the time being at least the EU also has a say in this. The US will also be eyeing this very, very closely indeed and not liking much at all.” 

News of the audacious offer saw shares in the LSE jump by more than 15 percent before later falling back. 

On Thursday shares in HKEX fell more than 3 percent as investors showed their concerns, shaving $1 billion off the company’s value. 

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