A Hot Arbitrage Trade Has Made Hong Kong Jeweler a Top Short-Seller Target

Gold bangles at a Chow Tai Fook Jewellery Group Ltd. store in Hong Kong. (Bloomberg) – Chow Tai Fook Jewellery Group Ltd.’s first major fundraising since its 2011 listing has turned the Hong Kong jeweler into one of the city’s most-shorted stocks.

The company’s bearish wagers have more than doubled to 39% of shares available, up from around 14% before it issued its larger-than-planned sale of convertible bonds in June, according to S&P Global data. The securities, which give a 0.375% annual coupon, can be converted into shares, and investors typically hedge the equity risk by shorting the stock.

Most Read from Bloomberg

• In Trump’s DC Crackdown, the National Park Service Leads Homeless Sweeps

• Germany Revives a Building Style With a Bleak History: Prefab Housing

• Chicago Schools’ Overdue Pension Payment Magnifies Fiscal Mess

• We Need a Reality Check on Crime, Safety and Transit

• Central Glasgow Could Be Poised for a Revival

  Supported by better-than-expected earnings, the stock has more than doubled this year, posting one of the best performances among Hang Seng Index members. The gains are likely to spark more shorting by note holders who need to keep their portfolios neutral, according to Mizuho Securities Asia Ltd. analyst Willer Chen.

The stock is already the second-most shorted on the Hang Seng Index, even after Chow Tai Fook bought back $200 million of shares to offset the impact of the convertible-bonds issuance.

Most Read from Bloomberg Businessweek

• As Bushmeat Consumption Grows, Nigerian Doctors Fear Outbreaks
• Taco Bell’s Not-So-Secret Sauce: An Endless Stream of New Stuff
• How Bombas Built a Fancy Socks Empire With $500 Million in Sales
• Foreigners Are Buying US Homes Again While Americans Get Sidelined
• J.Crew Survived Bankruptcy Next Up: Cultural Relevance?

©2025 Bloomberg L.P.

View Comments