Embracing Global Diversification and Capturing Asian Opportunities

At Holinger Asset Management, true global diversification has been our guiding principle since inception. As an active manager dedicated to generating sustainably attractive absolute returns, we have distinguished ourselves with a higher allocation toward Asia compared to our peers. This strategic focus allows us to capture attractively valued opportunities often overlooked by the majority of the market.

In line with our strategy, we are pleased to observe the recent momentum in Chinese stock markets as they are catching up with other regions. Amidst the ongoing recovery, investors are evaluating their allocation strategies, particularly in primary markets for convertible bonds, which are experiencing significant activity:

Yesterday, JD.com, one of China's largest e-commerce companies with a market capitalization of USD 50 billion, issued USD 1.75 billion in convertible bonds, with 35% conversion premium and 0.25% coupon, maturing in 2029. This debut issue, notable for its above-average size within the broader convertible bonds universe, ranked among the top 20 issues currently available. JD.com's entry into this asset class was well-received by convertible bond investors and garnered substantial attention.

In rapid succession, another significant deal emerged from the same region and industry: Alibaba Group Holding, with a market cap of USD 175 billion, announced its own convertible bond issuance. This anticipated transaction materialized today, surprising market participants with a record high issue size of USD 4.5 billion, potentially increasing to USD 5.0 billion. Terms for this deal are still to be finalized, with conversion premium in the range of 30% - 35%, coupon 0.25% - 0.75% and term of seven years. What is certain is the fact that this deal will directly increase the weighting of the Asia region in the most closely watched benchmarks by 3% to 6%.

At Holinger Asset Management, we have consistently advocated for investment in convertible bonds from Asia since the launch of our flagship «H.A.M. Global Convertible Bond Fund». We fully support the resurgence of Chinese issuers in this space and are closely monitoring further developments in the region.

We remain committed to leveraging our expertise in global diversification and active management to identify and capitalize on opportunities that deliver value to our clients.

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