From the Securities Lending Trading Desk

In the Americas, Tencent Music, which owns the four largest music apps in China, has seen lending volumes and fees jump after the Chinese manufacturing sector reported its first contraction in 2 years. In Asia, we have seen strong long term lending demand for Pilbara Minerals Ltd following a 38% decline in its share price in 2018. In Europe, China slowdown weighing on European luxury sector.

Americas

Supply shortage spikes lending fees on Bitauto Holdings Ltd (BITA). Brokers, counting on a long supply of Bitauto shares in the lending space, saw those shares dry up amidst a concentrated recall and lockup in the market. The abrupt scarcity of shares has sent the premium on BITA skyrocketing streetwide as brokers scramble to cover their investors’ short positions. We have seen a meaningful move in balance on this name as fees spike. In the broader market, the internet company which specializes in automobile pricing, information, and reviews saw its stock price tumble by 50% in 2018 and most recently endured the resignation of its CTO Lei Zhu.

Tencent Music Entertainment ADR (TME) IPOs in December, then headlines January lending amid Chinese technology slump. Tencent Music, which owns the four largest music apps in China, has seen lending volumes and fees jump after the Chinese manufacturing sector reported its first contraction in 2 years. The manufacturing sector in China carries far reaching impacts with ripple effects into the automobile, consumer product, agriculture and technology sectors. Tencent Music has not been immune to this slump as it currently trades below its IPO price. Investors will be watching this one closely as the SEC-imposed Quiet Period ends and published investment research will point this one in a bull or bear direction.

Asia Pacific

The IPO of Japanese Telecommunication provider Softbank Corporation flopped on its first day of trading as concerns over an impending price war and operational difficulties led to a share price slump. Softbank Corporation listed over 1.7 billion shares on December 19th. The listing came two weeks after a nationwide service outage which affected many customers in Japan and the company also recently acknowledged using equipment from Huawei, which faces restriction or bans in certain countries. Shares in Softbank Corporation slumped 15% on the first day of trading and we saw strong securities lending demand.

Lithium raw material producer Pilbara Minerals Ltd shares surged in Sydney trading after the company confirmed agreements to fund an expansion of its mine in Western Australia. Pilbara Minerals Ltd announced it had secured funding of USD 160m for a stage-two expansion at the Pilgangoora mine, which includes a pre-payment from Great Wall Motor Co and a share placement to Jiangxi Ganfeng Lithium Co. We have seen strong long term lending demand for Pilbara Minerals Ltd following a 38% decline in its share price in 2018.

Europe

China slowdown weighing on European luxury sector. Chinese nationals are expected to drive 60% of growth in the luxury industry in 2019. Apple has cut its guidance and we are witnessing an increase in securities lending demand for European suppliers including Dialog Semiconductor and AMS as a result. The global luxury brand Burberry Group has fallen 6%; likewise Kering, Hermes, Swatch and L’Oreal were also down this week.

Demand for the Dublin headquartered food and beverage provider Greencore Group Plc has increased into the new year after announcing a tender offer. The UK stock, listed on the FTSE250 index, plans to return up to £509 million to shareholders pending their approval at the AGM being held on the 29th January. The maximum number of shares to be acquired is just over 261 million which equates to roughly 37% of the firms issued ordinary share capital at a price of 195p a share. The desk has seen demand for guaranteed untendered shares as funds looks to profit from the premium the firm is looking to pay compared to the current market share price of 186p.