Both the Hang Seng and CSI 300 Indexes have traded down since human-to-human transmission of the Coronavirus was confirmed on January 20th. Short sellers have been active in Chinese and Hong Kong stocks trading on the U.S. exchanges. Since the 20th, we have seen $337 million of new shares shorted in U.S. traded Chinese\Hong Kong securities.
Of the twenty-three actively traded Chinese\Hong Kong ETFâ€™s that we track, there are five with short interest over $10 million. Overall, ETF shares shorted increased by $62 million, bringing overall Chinese\Hong Kong ETF short interest to $2.80 billion.
We are seeing increased short selling in the MCHI, FXI, KWEB and GXC ETFs while short covering in the ASHR and EWH ETFs. This looks to be a reallocation and increase of short exposure in the China based and Large Cap ETFs and decrease in the broader market cap and Hong Kong based ETFs.
On the equity side, the U.S. traded Chinese\Hong Kong stocks with the largest amount of new short selling were:
There was much less short covering in U.S. traded Chinese\Hong Kong Stocks, with only five securities with short covering worth over $10 million since January 20th.
There was an increase of new short selling worth $275 million in U.S. traded Chinese\Hong Kong equities this week. We expect short selling to continue with the larger market cap securities leading the pack, especially with the Chinese markets closed. Most of these names are easily borrowable and trade at or near General Collateral levels on the U.S. exchanges, it is unknown whether there will be restrictions or difficulties short selling in China and Hong Kong in the future.
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Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Managing Director Predictive Analytics, S3 Partners, LLC
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