In June this year the London Stock Exchange struck a deal to allow UK companies to sell shares in China, and Chinese companies to do the same in London. It might have been the kind of link-up the Hong Kong stock exchange was hoping for when it made a surprise $39 billion takeover bid for the London exchange this week. But that bid has now been emphatically rejected for a host of reasons listed in an LSE statement. The Hong Kong Exchange's valuation of the LSE falls, quote, "substantially short," it says. Its relationship with the Hong Kong government - its biggest shareholder - would quote, "complicate matters." And the ongoing unrest there adds to uncertainty for shareholders. The LSE intends, it says, to stick with its strategy of expanding into data with its $27 billion deal for Refinitiv, a deal it would have needed to drop as a condition of the offer. It sees, it concludes, "no merit in further engagement." Some analysts expect Hong Kong Exchange's CEO Charles Li to table an improved offer. But the blunt tone of the rejection indicates it could be a major challenge to bring the LSE around to his thinking. And if he fails, say analysts, his only options may be to withdraw - or make a hostile, rather than a friendly, bid.