In today’s briefing:
- *NEW* USTR Section 301 Proposed Actions on China Maritime Dominance
- Zomato/Eternal: Lower Foreign Ownership Limits & The BIG Passive Selling
- Merger Arb Mondays (21 Apr) – ENN Energy, Canvest, OneConnect, Makino, Shibaura, Welcia, Topcon
- A/H Premium Tracker (To 18 Apr 2025): AH Premia Fall in Low Volume
- Weekly Deals Digest (20 Apr) – Shibaura Electronics, Topcon, Jamco, TRYT, Canvest, ENN, Insignia
- HK Connect SOUTHBOUND Flows (To 18 Apr 2025); Buying of Internet, SOEs, and ETFs Previously Sold
*NEW* USTR Section 301 Proposed Actions on China Maritime Dominance
- Biden’s USTR came out with a flawed Section 301 report on Chinese maritime “dominance” in January. It is not that China shipbuilding is not dominant, but the report was flawed.
- In February/March (flawed) measures were proposed. Then mostly minimally-insightful hearings were held. Then Trump came out with an Executive Order “Restoring America’s Maritime Dominance” (that requires looking back 80yrs).
- Now we have new USTR Proposed Measures which water down the old ones quite considerably.
Zomato/Eternal: Lower Foreign Ownership Limits & The BIG Passive Selling
- Zomato (ZOMATO IN), now Eternal, listed in July 2021 with a Foreign Ownership Limit (FOL) of 100%. Since listing, foreign ownership has dropped from over 70% to just under 45%.
- Eternal is looking to cap foreign ownership at 49.5% to continue qualifying as an Indian-Owned-and-Controlled Company. That will give the company greater operational flexibility, especially for inventory ownership.
- The FOL decrease will result in selling from passive global index trackers. With the stock 23.5% off its highs and a steady increase in futures open interest, covering could ensue.
Merger Arb Mondays (21 Apr) – ENN Energy, Canvest, OneConnect, Makino, Shibaura, Welcia, Topcon
- 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: Insignia Financial (IFL AU), Oneconnect Financial Technology (6638 HK), ENN Energy (2688 HK), Seven & I Holdings (3382 JP), Smart Share Global (EM US), Domain Holdings.
- Lowest spreads: Makino Milling Machine Co (6135 JP), Sinarmas Land (SML SP), Shibaura Electronics (6957 JP), Tenma Corp (7958 JP), Aeon Delight (9787 JP), Naigai Trans Line (9384 JP).
A/H Premium Tracker (To 18 Apr 2025): AH Premia Fall in Low Volume
- AH Premia fall small. Spread curve torsion is mild but present, with narrow AH Premia widening, and wide premia narrowing.
- For a month I thought warning signs were flashing and spreads could widen. I think the trend is still to widening but torsion.
- The Quiddity Portfolio is pretty hunkered down and nearly flat H/A risk. But benefits from wider spreads coming in, narrow spreads widening, and liquidity dropping.
Weekly Deals Digest (20 Apr) – Shibaura Electronics, Topcon, Jamco, TRYT, Canvest, ENN, Insignia
- 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: China Resources Beverage (2460 HK) lock-up expiry; DN Solutions (298440 KS) and LG Electronics India (123D IN) IPOS.
- Event-Driven developments: Shibaura Electronics (6957 JP), Topcon Corp (7732 JP), Jamco Corp (7408 JP), TRYT (9164 JP), Canvest Environmental Protection Group (1381 HK), ENN Energy (2688 HK).
HK Connect SOUTHBOUND Flows (To 18 Apr 2025); Buying of Internet, SOEs, and ETFs Previously Sold
- Q1 saw record quarterly inflows by SOUTHBOUND investors at HK$435bn, beating the previous record of Q1 2021 by more than HK$100bn. The first three weeks in April were HK$168bn.
- Gross and net flows this week subsided quite substantially compared to previous weeks.
- We are in a post-tariff breather as the US says the ball is in China’s court and China looks like it will wait things out. Port volumes are telling.
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