In today’s briefing:
- The USTR’s New “Proposed Actions” For Section 301 Investigation on China’s Maritime/Shipping Sectors
- A/H Premium Tracker (To 7 Mar 2025): AH Premia Still Falling; Expect Curve Torsion or AH Widening
- HK Connect SOUTHBOUND Flows (To 7 Mar 2025); Big Volumes, Big Net; Tech, Banks, and Telecoms
- Merger Arb Mondays (10 Mar) – Seven & I, Naigai, ESR, Soundwill, OneConnect, Goldlion, PointsBet
- Soundwill Holdings (878 HK): Founder’s Scheme At $8.50/Share
- SSI Weekly Highlights: Liquidations, Mergers, and Strategic Developments in Biopharma
- Weekly Update (IDT, RHLD, SNRE, SNDK)
The USTR’s New “Proposed Actions” For Section 301 Investigation on China’s Maritime/Shipping Sectors
- The USTR issued a Section 301 report in January 2025. The report suggests China has tried to achieve dominance in global shipping, to the detriment of US commerce.
- The report is flawed, in data (it somehow manages to make up data which is otherwise available from MARAD), analytics, and conclusions, but the Trump administration has run with it.
- In February, the USTR announced “Proposed Actions” – fees for Chinese liners and international liners with Chinese ships, and restrictions on future exports. US users lose. And there are loopholes.
A/H Premium Tracker (To 7 Mar 2025): AH Premia Still Falling; Expect Curve Torsion or AH Widening
- AH Premia continue to fall. Spread curve torsion reverses again with wide premia trades seeing Hs perform the best vs their As.
- To me, warning signs are flashing on spreads. They are at their narrowest in 5yrs and they are volatile. Last week I recommended a HUGE trimming (30%) of the book.
- Hindsight is 20:20. I should have kept them, but the book still produced 51bp of alpha for the week on top of the 35bp of H/A beta.
HK Connect SOUTHBOUND Flows (To 7 Mar 2025); Big Volumes, Big Net; Tech, Banks, and Telecoms
- Gross SOUTHBOUND volumes dropped somewhat but still high. NET buying by SOUTHBOUND was HK$35bn which is still quite strong. Round-tripping volume down 20% week-on-week.
- The flows here are still striking. >20% of the top 100 most liquid Southbound eligible stocks saw SOUTHBOUND buy more than 10% of weekly volume.
- It feels like there is some common understanding among SOUTHBOUND investors which I do not understand. The numbers are big/growing.
Merger Arb Mondays (10 Mar) – Seven & I, Naigai, ESR, Soundwill, OneConnect, Goldlion, PointsBet
- 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: Naigai Trans Line (9384 JP), Soundwill Holdings (878 HK), Seven & I Holdings (3382 JP), OneConnect Financial Technology (OCFT US), Smart Share Global (EM US).
- Lowest spreads: Shibaura Electronics (6957 JP), Domain Holdings Australia (DHG AU), PointsBet Holdings (PBH AU), Makino Milling Machine Co (6135 JP), Proto Corp (4298 JP).
Soundwill Holdings (878 HK): Founder’s Scheme At $8.50/Share
- After small-cap property developer Soundwill Holdings (878 HK) was suspended pursuant to the Takeovers Code, I expected an Offer by way of Scheme.
- And that is what unfolded. Grace Foo (ED) and her family, controlling 74.97% of shares out, are Offering $8.50/share, including a $1.00/share dividend, a 62.84% premium to undisturbed.
- That’s still a whopping 87.66% discount to the most recent NAV (30th June 2024). But what are the options for minorities (apart from the headcount test)? And terms are final.
SSI Weekly Highlights: Liquidations, Mergers, and Strategic Developments in Biopharma
- Abrdn Diversified Income And Growth is undergoing a wind-down, trading at a 30% discount to NAV, with potential liquidation acceleration.
- OCI N.V.’s methanol business sale to Methanex is pending regulatory approvals, with unresolved Natgasoline JV stake issues affecting transaction value.
- Pacific Current Group’s A$300m buyback tender extended, with shares trading below tender price, and potential further capital returns.
Weekly Update (IDT, RHLD, SNRE, SNDK)
There were no new spin-off announcements this week.
The Middleby Corporation (MIDD) announced its plan to spin off its food processing business on February 25, 2025.
This strategic move aims to allow Middleby to concentrate on its core commercial foodservice and residential kitchen equipment sectors, while enabling the new entity to focus exclusively on food processing operations.
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