In today’s briefing:
- HLB Merger Arb’s Unique Timing Dynamics for a Juicy 8% Swap Spread
- A/H Premium Tracker (To 13 June 2025): HUGE H-Share Outperf Across The Board, “Beautiful Skew Move”
- HK Connect SOUTHBOUND Flows (To 13 June 2025); Volumes Up, TECH Down, HEALTHCARE Bought Big
- Last Week in Event SPACE: Hino Motors, Hong Kong’s Peg, Zijin Mining, MINISO
- (Mostly) Asia-Pac M&A: New World Res., Fuji Corp, TRYT, Shinsung Tongsang, Austal, Mitsu. Shokuhin
HLB Merger Arb’s Unique Timing Dynamics for a Juicy 8% Swap Spread
- Some local desks think the company pushed the timeline back to align with a potential FDA Class 1 approval for Rivoceranib expected by July.
- No word yet if it’s Class 1 or 2; Class 2 means November decision. Despite risks, local hedge desks are building arb plays, betting on the July FDA timing dynamics.
- No FDA decision by July means Class 2 and a sell-off, hitting HLB Co. hardest. Class 1 approval boosts both stocks, cuts cancellation risk, and sets the 8% spread floor.
A/H Premium Tracker (To 13 June 2025): HUGE H-Share Outperf Across The Board, “Beautiful Skew Move”
- AH spreads are SHARPLY narrower. The effect is dramatic across the “skew” i.e. very wide AH premia contracted more than very narrow premia. BYD is on its own.
- This smells very much like someone knows something. I expect RMB dual counters may be in the works. Caixin had an article Friday.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Monitor are both there free for SK readers.
HK Connect SOUTHBOUND Flows (To 13 June 2025); Volumes Up, TECH Down, HEALTHCARE Bought Big
- Gross SOUTHBOUND volumes up to US$15+bn a day this past 5-day week. Net buying still positive but still below US$500mm/day.
- Among the top buys as a percentage of volume, HEALTHCARE, FINANCIALS, ENERGY stand out, dramatically. Among top sells, INFO TECH again. 9 weeks in a row negative. Tencent bigly sold.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Monitor are both there free for SK readers.
Last Week in Event SPACE: Hino Motors, Hong Kong’s Peg, Zijin Mining, MINISO
- Is Hino (7205 JP) a short or a long at ¥366/share? Suggest short, but also selling more as the stock goes up, and buying back the short on big dips.
- A Bloomberg op-ed piece concludes it is time to move on from “from an archaic currency regime“. That conclusion on the Hong Kong peg appears presumptuous. And uninformed.
- A spin-off makes sense as Zijin (2899 HK) capitalises on the upward cycle in gold prices. However, Zijin is trading at a single-digit NAV discount. Before any holding company discount.
(Mostly) Asia-Pac M&A: New World Res., Fuji Corp, TRYT, Shinsung Tongsang, Austal, Mitsu. Shokuhin
- I tally 47 – mostly firm, mostly Asia-Pac – arb transactions currently being discussed and analysed on Smartkarma.
- Three new deal were discussed on Smartkarma this week: New World Resources (NWC AU)‘s Scheme, and Tender Offers for Fuji Corp (7605 JP), TRYT (9164 JP), and Shinsung Tongsang (005390 KS).
- Fer.Key updates/news took place on: Austal Ltd (ASB AU), HKBN Ltd (1310 HK), Shandong Fengxiang (9977 HK), and Mitsubishi Shokuhin (7451 JP).
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