Morning Commentary: China convertibles sell-off continues; Weibo, Pinduoduo active

By Abigail W. Adams

Portland, Me., July 27 – The sell-off in China-based convertible notes continued early Tuesday on a weak day for equity markets.

Equity benchmarks pulled back from their records with major indexes launching the day in the red and as inflation concerns once again drew attention as the Federal Open Market Committee meets.

The Dow Jones industrial average was down 122 points, or 0.32%, the S&P 500 index was down 0.51% and the Nasdaq Composite index was down 1.39% shortly before 11 a.m. ET.

While the convertibles market saw decent volume with $100 million on the tape about one hour into the session, activity was spread across a wide berth of names.

The convertible notes of Asia-based companies continued to struggle.

Weibo Corp.’s short-dated 1.25% convertible notes due Nov. 15, 2022 were active. The notes were changing hands at 96.5 early in the session with more than $11 million in reported volume.

Weibo’s American Depositary Shares were trading at $52.30, a decrease of 7.57%, shortly before 11 a.m. ET.

Pinduoduo Inc.’s 0% convertible notes due 2025 remained active with the notes continuing to sink.

The 0% notes were changing hands at 88.75 versus a stock price of $85.29 early in the session.

There was more than $8 million on the tape.

Pinduoduo’s ADSs were trading at $81.06, a decrease of 8.63%, shortly before 11 a.m. ET.

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