In today’s briefing:
- Why Is Michael Burry So Bearish on Alibaba (And Other Major Chinese Tech Stocks)?
- Horizon Robotics (9660 HK): Southbound Stock Connect Inclusion Today & Upcoming Index Flows
- Tsuruha (3391 JP)/Welcia (3141 JP): Vote Musings
- Soundwill Holdings (878 HK): Hard Lessons from Another HK Arbageddon
- Last Week in Event SPACE: Toyota Industries, CATL, Mitsubishi Logisnext, Mayne Pharma, Melco
- Weekly Deals Digest (25 May) – Toyota Industries, Shibaura, ESR, Soundwill, Mayne Pharma, GMO
- Merger Arb Mondays (26 May) – Mayne, Seven & I, Shibaura, Welcia/Tsuruha, Nissin, ESR, Dickson
- Zomato/Eternal: The BIG Passive Selling Starts
- Clarifying a Few Points of Confusion Surrounding the Samsung Biologics Spin-Off
- Taiwan Top 50 ETF Rebalance Preview: Elite Material (2383 TT) Walking a Fine Line
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.
Horizon Robotics (9660 HK): Southbound Stock Connect Inclusion Today & Upcoming Index Flows
- Horizon Robotics (9660 HK) will be added to Southbound Stock Connect from the start of trading today. Then there will be passive buying at the close on 20 June.
- The lock up expiry in April will result in large buying from trackers of the Hang Seng TECH Index (HSTECH INDEX) and HSIII Index in September.
- The stock will also be added to another large global index, though the timing on inclusion is not certain at the moment.
Tsuruha (3391 JP)/Welcia (3141 JP): Vote Musings
- Leading proxies recommend that Tsuruha Holdings (3391 JP) shareholders vote against the Tsuruha/Welcia Holdings (3141 JP) merger on 26 May.
- The share exchange terms favour Welcia over Tsuruha shareholders. The Tsuruha vote will be close but likely to be approved. Long Tsuruha is the trade, irrespective of the vote.
- For a vote pass, you are long synergies and a likely partial offer bump. For a fail, you are long an undemanding multiple and the optionality of a new bid.
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.
Last Week in Event SPACE: Toyota Industries, CATL, Mitsubishi Logisnext, Mayne Pharma, Melco
- Winner winner chicken dinner. A Nikke article suggests a bid higher than ¥6tn for Toyota Industries (6201 JP). In addition, people thinking about ¥18,400/share are going about this incorrectly.
- Contemporary Amperex Technology (CATL) (3750 HK) pops on its IPO debut. The HKEx has issued a high concentration warning
- Mitsubishi Logisnext Co., Ltd. (7105 JP) is still ragingly cheap given the move to delist dual parent/sub listings and having a global footprint. Own it here and now.
Weekly Deals Digest (25 May) – Toyota Industries, Shibaura, ESR, Soundwill, Mayne Pharma, GMO
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: GMO Internet (4784 JP) secondary offering of 91.7 million shares, worth around US$1.9 billion.
- Event-Driven developments: Toyota Industries (6201 JP), Shibaura Electronics (6957 JP), ESR Group (1821 HK), Soundwill Holdings (878 HK), Mayne Pharma (MYX AU), Gold Road Resources (GOR AU).
Merger Arb Mondays (26 May) – Mayne, Seven & I, Shibaura, Welcia/Tsuruha, Nissin, ESR, Dickson
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Mayne Pharma (MYX AU), Insignia Financial (IFL AU), ENN Energy (2688 HK), Seven & I Holdings (3382 JP), Smartpay Holdings (SPY NZ), ZEEKR (ZK US).
- Lowest spreads: Bright Smart Securities And (1428 HK), Dada Nexus (DADA US), Amara Holdings (AMA SP), Nissin Corp (9066 JP), Avjennings Ltd (AVJ AU), SLB Development (SLB SP).
Zomato/Eternal: The BIG Passive Selling Starts
- Following shareholder approval of the proposal to reduce the Foreign Ownership Limit from 100% to 49.5%, NSDL has updated the FOL. This starts the process of passive selling in Zomato.
- Passives will sell US$350m at the close on Tuesday. There is a low probability of more selling later in the week. There will be bigger selling in August.
- The size of the selling in August and beyond will depend on what foreign investors do in the stock till the end of June. Watch the red flag/ breach list.
Clarifying a Few Points of Confusion Surrounding the Samsung Biologics Spin-Off
- Will the newly listed spinco also IPO Samsung Bioepis? That’s a textbook ECO — and could spark shareholder value dilution concerns, regulatory pushback, or even a potential KRX block.
- The 8% dip looks tied to IPO fears around Bioepis. If Samsung hard-locks its no-IPO stance and FSS signs off, a near-term bounce in Biologics could be in play.
- Post-Listing, watch for Samsung C&T to shift exposure—potentially boosting the surviving company’s value while capping the spinco. Sets up a compelling relative-value trade worth positioning for.
Taiwan Top 50 ETF Rebalance Preview: Elite Material (2383 TT) Walking a Fine Line
- Elite Material (2383 TT)‘s stock price has soared recently and is forecast to be added to the Yuanta/P-Shares Taiwan Top 50 ETF in June, replacing Unimicron Technology (3037 TT).
- Passive trackers will have 1 day of ADV to buy in Elite Material (2383 TT) and over 1 day of ADV to sell in Unimicron Technology (3037 TT).
- However, Elite Material is at risk of deletion from another ETF where the impact of passive selling is a lot bigger. Tricky interplay between the two ETFs.
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