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Hong Kong stock exchange makes £32bn move for London counterpart | Business

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The Hong Kong stock exchange has made a surprise £32bn bid approach to take over the London Stock Exchange Group.

It comes weeks after the LSE agreed a $27bn (£22bn) all-share deal to take control of Refinitiv, a move the company said would transform it into a UK-headquartered, global rival to Michael Bloomberg’s financial news and data business.

Hong Kong Exchanges and Clearing (HKEX) has tabled a proposal to the LSE board that stipulates its offer will only proceed if the deal for Refinitiv is terminated or voted down by shareholders.

Charles Li, the chief executive of HKEX, said that the proposal is a “vote of confidence” in London as the UK faces leaving the European Union.

“The UK is a global financial centre and the city of London is always going to be strong, even post-Europe,” he said. “We see no reason why the temporary difficulties and challenges should be an obstacle.”

When the Refinitiv deal was announced, David Schwimmer, chief executive of the LSE, said it would allow it to expand into Asia and emerging markets.

HKEX, whose largest shareholder is the Hong Kong government, said its move to thwart that deal would instead drive its own ambitions to “reinforce Hong Kong’s position as the key connection between Mainland China, Asia and the rest of the world”.

Laura Cha, the chair of HKEX, said: “We believe a combination represents a highly compelling strategic opportunity to create a global market infrastructure group, bringing together the largest and most significant financial centres in Asia and Europe.

“Following early engagement with LSEG, we look forward to working in detail with the LSEG Board to demonstrate that this transaction is in the best interests of all stakeholders, investors and both businesses.”

Shares in the LSE initially jumped 16% but later fell back to £71.62, a rise of just over 5%. The cash and share deal would result in the LSE, whose key management HKEX has said it will retain, controlling about 41% of the combined company.

The LSE said it would consider HKEX’s approach, noting it was “unsolicited, preliminary and highly conditional. The board of LSEG will consider this proposal and will make a further announcement in due course.”

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The company also said it intends to press on with its deal to buy Refinitiv, whose Eikon terminals on trading floors challenge those provided by Bloomberg.

“LSEG remains committed to and continues to make good progress on its proposed acquisition of Refinitiv,” the company said. “A circular is expected to be posted to LSEG shareholders in November to seek their approval of the transaction.”

If the deal with Refinitiv falls through LSE will have to pay a break fee of £198m. Refinitiv is owned by a consortium led by Blackstone and including Thomson Reuters, which owns the Reuters news service.

In 2012, HKEX paid £1.4bn to buy the then 135-year-old London Metal Exchange, the centre for global metals trading, in a deal that transformed the group into a global player.

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India on course to be $5 trillion economy in five years: Nitin Gadkari

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Nitin Gadkari, Union Minister for Road Transport, Highways and MSME said the slew of economic measures and reforms being implemented by the Union government will act as a confidence booster for industry especially for the MSME sector and put the country on the path to become $5 trillion economy. He was speaking at the India Today Conclave 2019 being held in Mumbai.

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GM buyers and owners could soon start feeling impact of UAW strike

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General Motors Co. (GM) Chevrolet vehicles are displayed for sale on the lot at Phillips Chevrolet car dealership in Frankfort, Illinois.

Daniel Acker | Bloomberg | Getty Images

The strike against General Motors by 48,000 United Auto Workers Union members is set to enter its second week unless negotiators break through a series of reported logjams over the weekend.

The walkout is costly for both GM and the UAW, but the longer it drags on, the more likely it is to be felt by consumers, as well, both those looking to buy one of the automaker’s new products as well as owners of vehicles needing repairs.

In the weeks leading up to the contract deadline, Detroit’s largest automaker beefed up production to help pad dealer inventory, industry analysts noted. But that will only carry things for so long, especially with high-demand models, as well as hot new products like the 2020 Chevrolet Corvette.

Complicating matters, the closure of GM parts distribution warehouses is already posing problems, especially for owners needing collision and recall repairs.

“We got everything we need for this week, but that doesn’t mean that we won’t be short next week,” said Tiffany Sullivan, the manager at Rainbow Paint and Body, a collision repair shop in Savannah, Georgia, adding that she’s already been alerted about possible shortages by GM representatives.

For now, a number of the dealers that CNBC.com spoke to said they were in reasonably good shape when it comes to new vehicle inventory. Typically, automakers like to have somewhere between 60 and 65 days’ worth of inventory on dealer lots, said Michelle Krebs, a senior analyst with Cox Automotive.

But because of both the ongoing slowdown in the U.S. car market and a bump up in production in anticipation of a strike, GM was able to beef up its national inventory to about 77 days at the beginning of the strike, according to Cox data. The figures, however, vary sharply from one product line to another.

There were 93 days of Chevrolet Silverado pickups, but only 57 days inventory of the popular Chevy Tahoe SUV, below the industry norm. And even those numbers can be misleading, cautioned Tim Jackson, the president of the Colorado Auto Dealers Association. He expects GM’s retailers in the Rocky Mountain state to burn through their allocations quicker than those elsewhere considering that light trucks make up 82% of their sales, well above the national average.

“Right now, we have a cushion,” said Jackson, “but when you get to the hot products, like the high-end Silverado pickups (like the High Country model that can top $80,000), that’s where it’s going to be felt at the local level first.

Complicating matters, Jim Hoffa, the president of the International Brotherhood of Teamsters, last weekend declared that his union would not deliver any GM products that had not already reached showrooms ahead of the strike.

“Teamsters and the UAW have a decades-long relationship of having each other’s back,” Hoffa said. Neither GM nor the Teamsters would discuss how many vehicles might be tied up on factory lots or elsewhere, however.

The shoppers who could be most impacted as the strike stretches on are those that placed custom orders, said Carla Bailo, the head of the Center for Automotive Research, or CAR, in Ann Arbor, Michigan. They will have to wait until factories start operating again, and even then, it could take a few days, possibly a week or more, before production gets back to normal.

The strike will also hit hard those who have been waiting for many new 2020 models, especially those that were just getting into production. The highly anticipated, eighth-generation Chevrolet Corvette is one the products that could face the biggest backlog. GM and its dealers have already taken nearly a full year of orders, so those late on the list could be in for a much longer wait than expected, said Bailo.

But “the real Achilles Heel,” at least in terms of serving customers, will be felt when it comes to repairs, both in GM dealer service departments and at independent garages and repair shops, said the general manager of one of GM’s largest Detroit dealers, asking not to be identified by name.

Even a one-week shutdown, he said, can put his service department two weeks behind, in part, because it will have to wait until everyone is back to work and settled back in at GM warehouses before his dealership can place new orders. Having enough parts to meet ongoing recalls will be a problem for some dealers, but the bigger problem, he said, is with parts like bumpers and fenders needed to handle repairs, especially on older GM products.

“We don’t know who will wreck their car but we’d have to have a warehouse the size of another dealership to keep all the parts we might need in store,” he said.

People who’ve had collisions know they will have to wait, said CAR’s Bailo, but the longer the strike, and the longer the wait, the more likely “people are going to start screaming.” And while some might blame the union, it’s GM they’re most likely to get mad at.

Longer term, the strike could impact consumers in another way.

“We know the cost of (producing) vehicles is going to go up,” said Cox analyst Krebs, noting that consumers are already seeing the impact of things like President Donald Trump’s trade wars in terms of record prices at the showroom. In today’s competitive market, automakers have been trying to absorb costs, where possible, but the higher the price of an eventual settlement, the more likely it will be felt in rising sticker prices.

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Pace of Growth Slowed for U.S. Household Net Worth in Second Quarter

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Americans also ramped up borrowing and saved at a slower rate, according to the Federal Reserve report.


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Bruno Rocha/Zuma Press

The net worth of American households grew in second quarter, but at a slower rate than the prior quarter.

Household net worth grew 1.64% in the second quarter to $113.5 trillion, compared to a 4.99% growth rate in the previous three-month period. However, the first-quarter growth was largely a bounceback after stock-market declines produced a contraction in household wealth in 2018’s fourth quarter.

Much of that gain comes from a 3.3% rise in the value of household holdings of corporate equities. Stock markets bounced up and down in April and May as the threat of trade conflicts waxed and waned.

Americans also saw a modest rise in their housing wealth. Equity in real estate owned by households rose 0.4%. The housing market has struggled for more than a year, which has weakened the growth of home prices despite low mortgage rates.

Household retirement assets—those held in workplace or personal savings plans such as 401(k)s or IRA’s—grew 1.4%.

The figures come from a quarterly report issued by the Federal Reserve known as the Flow of Funds, which tracks the aggregate wealth of all U.S. households and nonprofit organizations. The report offers no details of how that wealth is distributed among households. The figures also not adjusted for inflation.

Americans also ramped up borrowing and saved at a slower rate. Growth in household debt accelerated to a seasonally adjusted annual rate of 4.26% in the second quarter, the strongest pace since the fourth quarter of 2017.

The household saving rate fell to 8.03% of disposable personal income, down from 8.49% in the first quarter.

The pace of borrowing by businesses slowed, however. Business debt grew at a seasonally adjusted annual rate of 4.36% in the second quarter down from 6.72% in the first quarter.

Federal government debt rose 2.08% in the quarter, a slower pace than in the first quarter, while state and local debt fell 2.51%.

Write to David Harrison at david.harrison@wsj.com

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