In today’s briefing:
- Why Is Michael Burry So Bearish on Alibaba (And Other Major Chinese Tech Stocks)?
- Soundwill Holdings (878 HK): Hard Lessons from Another HK Arbageddon
- Tencent (700 HK): Strategies to Navigate Low Volatility and A Flat Term Structure
- China Healthcare Weekly (May 25) – Pfizer-3SBio’s Record-Breaking Deal, RemeGen’s HK$796Mn Placing
- Monthly Container Shipping Tracker | Pricing Still Weak | No Signs of a Recovery | SHORT (May 2025)
Why Is Michael Burry So Bearish on Alibaba (And Other Major Chinese Tech Stocks)?
- It recently became publicly available that Michael Burry (CEO of Scion Asset Management) started buying put options on numerous Chinese stocks including Alibaba Group Holding (BABA US).
- We highlight four major reasons why Burry may have turned bearish on Chinese tech names (tariffs, delisting threats, increasing hostile political pressure on China, and China’s 30 year bond yield).
- Although we do not know exactly know how Burry has changed his position in 2Q25, he is likely to have reduced put options on major Chinese tech stocks in April/May.
Soundwill Holdings (878 HK): Hard Lessons from Another HK Arbageddon
- Soundwill Holdings (878 HK) shareholders have voted against the Foo family’s HK$8.50 per share offer. The minority participation rate was high, and the NO vote comfortably failed the value test.
- Unlike the Goldlion Holdings (533 HK) deal break, the price action over the last three days pointed to a deal break. Like previous deal breaks, this one offers hard lessons.
- Soundwill has the fourth-highest premium of the pre-deal break price to the undisturbed price compared to previous deal breaks. My estimated deal-break price is HK$5.63, 13.2% below the last close.
Tencent (700 HK): Strategies to Navigate Low Volatility and A Flat Term Structure
- Implied Volatility Trends: One-month implied volatility is currently cheap, trading in its 14th percentile, while Tencent (700 HK) approaches its twelve-months high.
- Skew and Term Structure Dynamics: A pronounced skew smile and a relatively flat term structure make spreads and calendar / diagonal spreads attractive strategies.
- Open Interest Distribution: Liquidity can be found in the monthly May expiry and the Quarterly expiries. The historically low implied volatility facilitates longer term positions.
China Healthcare Weekly (May 25) – Pfizer-3SBio’s Record-Breaking Deal, RemeGen’s HK$796Mn Placing
- The 11th batch of national VBP rules is expected to include optimizations aimed at balancing bidding prices with drug quality
- The US$6 billion deal between Pfizer and 3SBio has energized the innovative drug industry. While 3SBio’s valuation may continue to rise, Akeso’s valuation could face downward revisions.
- RemeGen has shown positive momentum, with its valuation reflecting RC18’s successful out-licensing already. Its recent HK$796 million placement indicates a clear intent to raise funds at a premium.
Monthly Container Shipping Tracker | Pricing Still Weak | No Signs of a Recovery | SHORT (May 2025)
- Shares of container carriers have surged on expectations of a strong recovery in volume
- But April data show pricing continued to soften despite solid North American demand
- The carriers themselves and other industry players remain downbeat; SHORT the carriers
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