TMT: Lenovo, KraneShares CSI China Internet ETF, Razer Inc and more

In today’s briefing:

HSCEI Index Rebalance Preview: Lenovo Could Replace Hansoh Pharma; Great Wall In/Sunac Out?
New CSRC “Provisions” Take a Step Towards Meeting PCAOB Requirements
Merger Arb Mondays – Yashili, Razer, Sezzle, Link Admin, Uniti, AKM, Virtus

HSCEI Index Rebalance Preview: Lenovo Could Replace Hansoh Pharma; Great Wall In/Sunac Out?

Lenovo (992 HK) could replace Hansoh Pharmaceutical (3692 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the June rebalance to be implemented on 10 June.
If Sunac China Holdings (1918 HK) remains suspended, it could be deleted from the index and Great Wall Motor (2333 HK) could be added to the index.
Passive Hang Seng China Enterprises Index (HSCEI INDEX) trackers will need to buy around 2.45% of Lenovo (992 HK)‘s real float. Short interest is over 17 days of ADV.

The PCAOB has not, despite a cooperation agreement with the CSRC signed in 2013, been able to conduct on-site investigations of a HK or mainland-based company since 2010.
On Friday, the CSRC published a new Strengthening Confidentiality and File Management Related to Overseas Issuance to replace 2009 rules.
Importantly, the revised Provisions deletes the stipulation that “on-site inspections shall be dominated by domestic regulators or depend on the conclusions of inspections by domestic regulators.” Will it be enough?

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore and the US (Chinese ADRs only).
This week, the highest gross spreads are Yashili International Holdings (1230 HK), Razer Inc (1337 HK), Sezzle Inc (SZL AU), Link Administration Holdings (LNK AU), Uniti Group Ltd (UWL AU)
The lowest gross spreads CIMIC Group Ltd (CIM AU), China Logistics Property Holdings (1589 HK), Dragon Crown Group (935 HK), 51 Job Inc Adr (JOBS US), Jin Jiang Capital.

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