Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Since August 2012, reportable net short positions in Hong Kong at the end of each week are filed with the SFC confidentially and are <a href="https://www.sfc.hk/web/EN/regulatory-functions/market-infrastructure-and-trading/short-position-reporting/aggregated-short-positions-of-specified-shares.html" target="_blank" rel="noopener">published one week</a> after the submission - typically Friday afternoon.
Under the <a href="https://www.hklii.hk/eng/hk/legis/reg/571AJ/" target="_blank" rel="noopener">Securities and Futures (Short Position Reporting) Rules</a>, an investor who, on the last business day of each week, holds a net short position of 0.02% of the "specified shares", or HK$30mn (whichever is lower), is required to report his net short position to the SFC within 2 business days.
The HKEx provides a <a href="https://www.hkex.com.hk/Services/Trading/Securities/Securities-Lists/Designated-Securities-Eligible-for-Short-Selling?sc_lang=en" target="_blank" rel="noopener">list</a> of designated securities eligible for short selling. Since Mar 2017, all stocks are covered, not just stocks in the Hang Seng Index or the Hang Seng China Enterprises Index, as it was previously.
There is a lot of unnecessary noise in these weekly reports on account of the low threshold - just how meaningful is the HK$60mn short in China Mobile with a market cap of HK$1.15tn? Not much.
But I thought it would be useful exercise to see how shorts behaved in 2020, using specific notable points in time as reference points (at the time of the lockdown in Wuhan (23 Jan), the low of stock markets in late March) against where we are now.
As always, more below the fold.

Since August 2012, reportable net short positions in Hong Kong at the end of each week are filed with the SFC confidentially and are published one week after the submission - typically Friday afternoon.
Under the Securities and Futures (Short Position Reporting) Rules, an investor who, on the last business day of each week, holds a net short position of 0.02% of the "specified shares", or HK$30mn (whichever is lower), is required to report his net short position to the SFC within 2 business days.
The HKEx provides a list of designated securities eligible for short selling. Since Mar 2017, all stocks are covered, not just stocks in the Hang Seng Index or the Hang Seng China Enterprises Index, as it was previously.
There is a lot of unnecessary noise in these weekly reports on account of the low threshold - just how meaningful is the HK$60mn short in China Mobile with a market cap of HK$1.15tn? Not much.
But I thought it would be useful exercise to see how shorts behaved in 2020, using specific notable points in time as reference points (at the time of the lockdown in Wuhan (23 Jan), the low of stock markets in late March) against where we are now.
As always, more below the fold.

Hong Kong' Short Interest: From the Wuhan Lockdown, The Market Low, Until Now

China Agri Industries Hldgs / Event-Driven

<div>
On the 28 November, state-owned COFCO, and major shareholder, <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/1128/2019112800135.pdf" target="_blank" rel="noopener">proposed</a> the privatisation of grain processor and trader <a href="https://www.smartkarma.com/entities/china-agri-industries-hldgs" target="_blank" data-smartkarma-citation="entities:11088:1" rel="noopener">China Agri Industries Hldgs (606 HK)</a> at $4.25/share, a 34.07% premium to last close, by way of a Scheme. The price was final. 
</div>
<div>
With COFCO, together with concert parties, holding 60.75% of shares out, the blocking vote at the Scheme Meeting was 3.925%. No single shareholder has such a blocking stake. The headcount test does not apply as China Agri is Hong Kong-incorporated.
</div>
<div>
The Scheme Document is now <a href="http://img.chinaagri.com/Uploads/Zlyz/File/2020/02/13/u5e45656213fae.pdf" target="_blank" rel="noopener">out</a>. The Court Meeting is scheduled to take place on the 6 March. The IFA considers the Offer to be fair and reasonable. Optically, this opinion was a given.
</div>
<div>
This is a pretty clean Scheme. I previously estimated payment the second week of March - however, the indicative payment will now occur on or before the 30 March, after the dispatch of the Scheme Document was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/1218/2019121800763.pdf" target="_blank" rel="noopener">delayed</a> until the 14 February from the 18 December. 
A further interim dividend of HK$0.04, declared on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0204/2020020401847.pdf" target="_blank" rel="noopener">4 February</a>, will also be added to the Offer Price, after the Offeror "consented to the declaration and payment". The record date for this dividend is the 17 March, the same day as the Scheme Record date. The payment is expected on the 17 April.
Trading at a gross spread of 1.6%, including the dividend, with payment in around 6 weeks, for those investors seeking a quick return.

</div>


On the 28 November, state-owned COFCO, and major shareholder, proposed the privatisation of grain processor and trader China Agri Industries Hldgs (606 HK) at $4.25/share, a 34.07% premium to last close, by way of a Scheme. The price was final. 


With COFCO, together with concert parties, holding 60.75% of shares out, the blocking vote at the Scheme Meeting was 3.925%. No single shareholder has such a blocking stake. The headcount test does not apply as China Agri is Hong Kong-incorporated.


The Scheme Document is now out. The Court Meeting is scheduled to take place on the 6 March. The IFA considers the Offer to be fair and reasonable. Optically, this opinion was a given.


This is a pretty clean Scheme. I previously estimated payment the second week of March - however, the indicative payment will now occur on or before the 30 March, after the dispatch of the Scheme Document was delayed until the 14 February from the 18 December. 
A further interim dividend of HK$0.04, declared on the 4 February, will also be added to the Offer Price, after the Offeror "consented to the declaration and payment". The record date for this dividend is the 17 March, the same day as the Scheme Record date. The payment is expected on the 17 April.
Trading at a gross spread of 1.6%, including the dividend, with payment in around 6 weeks, for those investors seeking a quick return.



On the 25 November, grain processor and trader <a href="https://www.smartkarma.com/entities/china-agri-industries-hldgs" target="_blank" data-smartkarma-citation="entities:11088:1" rel="noopener">China Agri Industries Hldgs (606 HK)</a> was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/1125/2019112500137.pdf" target="_blank" rel="noopener">suspended</a> pursuant to the Hong Kong Code on Takeovers and Mergers.
This morning state-owned COFCO, and major shareholder, has <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/1128/2019112800135.pdf" target="_blank" rel="noopener">proposed</a> the privatisation of China Agri at $4.25/share, a 34.07% premium to last close, by way of a Scheme. The price is final. No dividends to be added, or netted.
COFCO, together with concert parties, holds 60.75% of shares out. Scheme shares - or independent shares, as both numbers are almost identical - comprise 39.25% of shares out, therefore the blocking vote at the Scheme Meeting is 3.925%. No single shareholder has such a blocking stake.
Outstanding options move the numbers a smidgen but it will have little bearing on the outcome.
China Agri is Hong Kong-incorporated therefore the headcount test does not apply.
This looks like a pretty clean Scheme. I estimate payment the second week of March. Trading at a gross/annualised spread of 5.2%/19.9% as I type. I'd take those odds.

On the 25 November, grain processor and trader China Agri Industries Hldgs (606 HK) was suspended pursuant to the Hong Kong Code on Takeovers and Mergers.
This morning state-owned COFCO, and major shareholder, has proposed the privatisation of China Agri at $4.25/share, a 34.07% premium to last close, by way of a Scheme. The price is final. No dividends to be added, or netted.
COFCO, together with concert parties, holds 60.75% of shares out. Scheme shares - or independent shares, as both numbers are almost identical - comprise 39.25% of shares out, therefore the blocking vote at the Scheme Meeting is 3.925%. No single shareholder has such a blocking stake.
Outstanding options move the numbers a smidgen but it will have little bearing on the outcome.
China Agri is Hong Kong-incorporated therefore the headcount test does not apply.
This looks like a pretty clean Scheme. I estimate payment the second week of March. Trading at a gross/annualised spread of 5.2%/19.9% as I type. I'd take those odds.

Going With The Grain As COFCO Bids For China Agri

China

CPMC Holdings Ltd. manufactures food packaging products.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

CPMC Holdings (906 HK)

Hong Kong' Short Interest: From the Wuhan Lockdown, The Market Low, Until Now

Since August 2012, reportable net short positions in Hong Kong at the end of each week are filed with the SFC confidentially and are published one...

David Blennerhassett

China Agri: Done Deal As IFA Signs Off

On the 28 November, state-owned COFCO, and major shareholder, proposed the privatisation of grain processor and trader China Agri Industries Hldgs...

David Blennerhassett

Going With The Grain As COFCO Bids For China Agri

On the 25 November, grain processor and trader China Agri Industries Hldgs (606 HK) was suspended pursuant to the Hong Kong Code on Takeovers and...

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)