From the Securities Lending Trading Desk

In the US, Geron Corporation’s stock price plummeted as much as 76% last week following news that Johnson and Johnson would end its partnership with the clinical stage biopharmaceutical company. Genscript Biotech Corp crashed 47% when the report was released before rising 18% after the company denied the accusations. In Europe, H&M, a long term popular borrow name, continued to prove popular this week as CEO Karl-Johan Persson made positive remarks on the near-term business prospects of the fashion retailer.

Americas

Johnson&Johnson ends partnership with Geron Corp. Geron Corporation’s stock price plummeted as much as 76% last week following news that Johnson and Johnson would end its partnership with the clinical stage biopharmaceutical company. Geron’s stock price had risen over the course of the year from $1.81 at the start of 2018 to $6.38 prior to the news. The drop then erased $750mill worth of market value in Geron, in one day, and has spiked lending fees into the 100f range.

Tesla is once again in the headlines as an SEC complaint against Elon musk sent share prices into a nose-dive. The complaint alleges that Musk falsely indicated that should he choose to, it was almost certain that he would be able to take Tesla private at a more competitive purchase price than the company’s then current share price, that funding for this transaction had been secured and that the only contingency was a shareholder vote. However, Musk had in fact not even discussed key deal terms with any potential funding source. Thus, Tesla’s board is further seeking to remove Musk from power. But without an obvious successor in place, the prospect of Tesla without a leader sent share prices tumbling. We have seen the early signs of lending levels tightening as the volatility on this name has renewed once again.

Asia Pacific

Heavily shorted Chinese truck maker Sinotruk Hong Kong Ltd shares surged 69% in September on optimism that a newly appointed chairman at its parent company will improve performance. Sinotruk Hong Kong Ltd’s parent company China National Heavy Duty Truck Group appointed Tan Xuguang as chairman in August and he is expected to lift performance through acquisitions and restructuring. Shares were further boosted by the news that Volkswagen, which has a stake in Sinotruk, agreed to create a joint venture to manufacture heavy duty trucks. We have seen strong long term securities lending demand for Sinotruk Hong Kong Ltd.

Hong Kong listed Genscript Biotech Corp shares lost almost half their value after an anonymous bearish report was published online. Genscript Biotech Corp crashed 47% when the report was released before rising 18% after the company denied the accusations. The report that caused the drop was written in the name of Flaming Research Group and shared on Chinese social media. Genscript Biotech Corp called the called the report “misleading, biased, selective, inaccurate and incomplete” in a statement to the Hong Kong exchange. We saw a moderate increase in lending demand for Genscript Biotech Corp following the report’s release.

Europe

Fashion retailers dominate equity headlines this week. H&M, a long term popular borrow name, continued to prove popular this week as CEO Karl-Johan Persson made positive remarks on the near-term business prospects of the fashion retailer. Shares are now up 35% since the beginning of September, effectively erasing much of this year’s price decline. Borrow demand remains high with short interest above 13%. Global lending utilization is currently at 92% of lendable quantity according to Markit. Demand was strong after Bonmarche (BON LN) issued a profit warning following weak store sales which sent the stock down 22%, in Italy, SFL IM dropped to historic lows following news that the eyewear maker said that it would have to raise capital to support the execution of it 2020 business plan. The stock is down 59% YTD and active quantity on loans is almost at 100% according to Markit.

Lending demand for construction companies remains high across Europe as price pressures continue. Construction and engineering company, Obrascon Huarte fell as much as 37% in two days following a reported H1 loss of EUR 843.6M. Shares are now down 63% YTD. Short interest remains high at 7% and global borrow utilization is currently at 87% of lendable quantity according to Markit. Salini Impregilo (SAL IM) remains a popular borrow as short interest remains high at 5%. The share price is close to historic lows and is down 40% YTD. Global lending utilization is currently at 75% of lendable quantity according to Markit. Spanish construction company Tecnicas Reunidas (TRE SM) continues to be a popular borrow with 17 of 21 analysts cited rating the stock as ‘hold’ or ‘sell’ (source: Bloomberg). Short interest has decreased recently but remains high at 7%. The share price is down 10% since the beginning of September.