Hang Seng (11 HK)'s Offer: HSBC Investors Are Not Sold On The Strategic Benefits

• Since announcing HSBC (5 HK)‘s Offer, Hang Seng Bank (11 HK) has traded tight-ish to terms, at a ~3.9% gross spread (including dividends). Or ~10% annualised if a five month offramp.

• Annualised spreads for clean liquid deals in Asia-Pac, do tend to widen after day 1. Meaning, the gross spread remains roughly static as investors hit their full quota early on.

• HSBC shareholders are questioning the deal merits. For Hang Seng minorities, this is a great exit. Inside this report, I take a deeper dive into Hong Kong bank takeover precedents.

The Trade:

• Safe (dull?!) deal. Trading tight as every man and his dog views this as a term deposit.

• If not in, this is one to pick up on a wobble.

• For non insto buyers, the cheaper (illiquid) ADRs may be an option.