A Hot Arbitrage Trade Has Made Hong Kong Jeweler a Top Short-Seller Target

Chow Tai Fook Jewellery Group Ltd.’s first major fundraising since its 2011 listing has turned the Hong Kong jeweler into one of the city’s most-shorted stocks.

The company’s bearish wagers have more than doubled to 39% of shares available, up from around 14% before it issued its larger-than-planned sale of convertible bonds in June, according to S&P Global data. The securities, which give a 0.375% annual coupon, can be converted into shares, and investors typically hedge the equity risk by shorting the stock.