Hedge Fund Short Covering Fuels Demand in $5 Billion CATL Deal

Hedge funds bought the bulk of the shares in Contemporary Amperex Technology Co. Ltd.’s $5 billion placement, with at least some of the demand driven by traders seeking to cover short positions on the battery maker’s Hong Kong-listed shares, according to people with knowledge of the matter.

The short positions were one leg of a popular trade that CATL’s more expensive Hong Kong shares would narrow their premium over those listed in Shenzhen. Hedge funds received more than $3 billion worth of the shares in Hong Kong’s biggest deal of the year so far, said the people who asked not to be identified discussing private information.