Hong Kong Secondary Listings Present Arbitrage Opportunities
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The wave of secondary listings in Hong Kong by Chinese firms seeking an escape from the potential of forced delistings from the U.S. is proving to be a great arbitrage trade.
For example, Yum China Holdings Inc. and Huazhu Group Ltd. have both priced their flotations at discounts to their U.S. share prices, giving hedge funds the opportunity to buy the Hong Kong offering while shorting the U.S. stock and profiting from the price difference.