Now Hong Kong Exchange joins the merger mania

It came within hours of news that the New York Stock Exchange and Deutsche Börse are in merger talks, and a day after the London Stock Exchange said it has agreed a £4.5 billion tie-up with Toronto's TMX exchanges group.

Hong Kong is the world's ninth-biggest stock market in revenue terms but is seen by many as one of the best ways into the rapidly growing markets of south-east Asia.

It is also the world's most expensive exchange by far, capitalised at $24 billion (£15  billion) compared with LSE/TMX's combined value of
$6.9 billion. In a statement, the Hong Kong Stock Exchanges and Clearing said: "Due to changes in the financial market landscape, HKEx will consider international opportunities for alliances, partnerships and other relationships that present strategically compelling benefits consistent with its focus on markets in China."

Shares in the Hong Kong Exchange had fallen by almost 5%, their worst daily drop since May 2009, before it made its announcement, on fears that it could be hurt by the rapid consolidation of international share markets.

The Hong Kong market is home to 1400 companies and is second only to Tokyo in the region by market capitalisation.

Among major companies listed on the Hong Kong exchange are HSBC, Jardines, Cathay Pacific, Hutchison Whampoa and Swire Pacific.

The London Stock Exchange would not immediately comment on whether it could merge with Hong Kong.

Observers of the current wave of mergers and consolidation believe the LSE, under chief executive Xavier Rolet, would still prefer to reach a full merger with the Tokyo stock exchange, with which it already has a close working relationship.

However, now that the Hong Kong board is looking for a deal London is bound to show more than a passing interest. Adding any Far Eastern market into the LSE/TMX merger would create the first truly 24-hour share and derivatives trading market in the world.

Hong Kong has come under increasing pressure since the Singapore and Australian exchanges announced their plans to merge at the end of last year.

Singapore has increasingly become the other Far Eastern market of choice for primary or secondary listings by international companies.

Gym group Fitness First is planning to float there this year.

But Hong Kong has managed to hold on to one major advantage. It is still home to the majority of overseas listings by Chinese companies.

Investors who do not feel secure enough to trade directly on the Shanghai or Shenzhen stock markets choose to do their trades in Hong Kong. It has also been chosen by Vale and Glencore as their secondary market of choice.