HKD: Confidential Shein IPO Filing Could Muddy HK Cash Demand
Jun-27 11:16
Shein's IPO, set to potentially be the largest in Hong Kong this year, could be filed as soon as today - however the filing may be classed as 'confidential' meaning the company keeps some details of the float private for a longer period - bucking the usual practice for big Hong Kong floats.
- The IPO pipeline in Hong Kong has come under increased scrutiny given the moves in FX in recent weeks as heightened demand for IPOs can increase cash demand, lifting local rates and the currency. HKMA intervened on the weak side of the trading band this week (having intervened on the strong side just 8 weeks ago - the shortest gap between intervention at each end of the band on record)
- Shein is one of the most anticipated floats in terms of size - but a confidential filing may distort demand for exposure and could negatively impact local rates relative to a public float of the same size.
- The piece writes that a confidential filing allows Shein to go through regulatory review without public disclosures - a clear sensitivity for the company that has failed to float in both the US and UK markets in recent years.
- Tariff and de minimis risks to valuation are clear: one of the sources in the piece states "Its eventual IPO valuation will hinge on the impact of the tariff changes"
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US DATA: Composite MBA Applications Dip As Swap Spread Re-Widens A Touch
May-28 11:13
- MBA composite mortgage applications dipped -1.2% last week (sa) after a heavier -5.1% the week prior.
- The breakdown was more mixed than usual, with new purchase applications rising 2.7% after -5.2% whilst refis saw further weakness with -7.1% after -5.0%.
- Relative levels: composite at 50% of 2019 average levels, new purchases at 63% and refis at 37%.
- The 30Y confirming mortgage rate increased 6bps to 6.98% as it started to reflect what has been a sharper climb in 10Y swap rates although one that fizzled out last week with no change in average rates for the latter.
- It saw the confirming rate to swap spread rise 6bps to 302bps having tightened 19bps from 3.15% to 2.96% in the first half of May.
BONDS: US and UK Roll pace (updated)
May-28 11:06
Roll pace Update, pretty much all done. All the Volume in US Treasuries is just spread related, and September is front Month.
- WNA: 86%%.
- USA: 87%.
- UXY: 81%.
- TYA: 82%.
- FVA: 82%.
- TUA: 81%.
- Gilt 95%.
OUTLOOK: Price Signal Summary - Bull Cycle In Bunds Is Intact
May-28 11:04
- In the FI space, recent gains in Bund futures suggest the move down between Apr 22 - May 15, has been a correction. A stronger resumption of gains would strengthen the reversal and signal scope for a climb towards 132.03, the Apr 7 high. This week’s climb reinforces a bullish theme. Key short-term support to watch is 129.13, the May 15 low. A break would be bearish and mark a resumption of the recent bear cycle.
- A bear cycle in Gilt futures remains in play and last week’s move lower reinforces the bearish theme. The contract has recovered from its recent lows - gains are considered corrective and this is allowing a short-term oversold condition to unwind. The bear trigger has been defined at 90.11, the May 22 low. Key short-term resistance to watch is 91.87, the May 20 high. It has been pierced, a clear break of this level is required to highlight a stronger reversal.
