The operator of the Stock Exchange of Hong Kong is keeping alive the hope of taking over the London Stock Exchange, even though the 321-year-old British bourse rebuffed its $39 billion bid with a blunt letter on Friday.

Investment banks and research houses have joined in a chorus of concern over the deal, as ongoing social unrest and a geopolitical storm rock the two major financial centers.

In a strongly worded letter to the chairman and chief executive of Hong Kong Exchanges and Clearing-the HKEX operates the city's stock exchange and futures exchange-LSE Chairman Don Robert said the unsolicited takeover bid undervalued its business, lacked strong commercial rationale and would be difficult to implement due to scrutiny from various regulatory entities.

Citing the city's current worrying situation, Robert questioned "Hong Kong's position as a strategic gateway to the Chinese mainland in the longer term".

Robert made clear his preference for Shanghai over Hong Kong as a strategic partner, referring to the LSE's existing stock connect program with the Shanghai Stock Exchange, which gives it direct access to the massive Chinese mainland market.

Such an endorsement came right after China announced last week it would scrap investment quotas under the QFII and RQFII programs, allowing global traders unfettered access to the world's second-largest capital market.

The HKEX said in a statement released on Friday that it was disappointed the LSE declined to "properly engage" in what could be "a highly compelling strategic opportunity".

The HKEX said it would have more talks with LSE shareholders and refused to give up on the deal.

The HKEX would not be the first to fail in a bid to merge with the LSE, Hong Kong-based brokerage firm China Galaxy International wrote in its latest report. In 2017, a proposed merger between LSE and Deutsche Boerse AG was rejected by the European Union.

Nasdaq has made three takeover proposals and once became the largest institutional shareholder of the LSE. Euronext and Macquarie Bank also conceded defeat in their monthslong battle to buy the British bourse.

Such failures shed light on how difficult the marriage between stock exchanges could be, especially when the deal comes at a tricky time when a series of protests in Hong Kong, escalation of Sino-US trade tensions and the Brexit gridlock buffet the two cities with "unprecedented uncertainties and challenges", Bank of America Merrill Lynch said in a report.