Chinese Traders Still Seeking To Sell Despite Latest Rally

The world-beating rebound in Chinese equities is failing to scare off short sellers.

The Hang Seng China Enterprises Index, which led declines among global equity gauges this year through March 20, has since rebounded 7.3 percent for the world’s biggest gain. Traders who piled on bets against the iShares China Large-Cap exchange-traded fund during the rout have maintained those wagers even as stocks jumped. Short interest hit a record 29 percent of shares outstanding on March 24 before slipping back on March 26 to match its level before stocks began rallying, Markit data show.

Chinese equities recovered after valuations fell to the lowest level in 12 years, the government said it will accelerate construction projects and regulators eased funding restrictions for financial companies. Those steps may not be enough to allay investor concern that earnings will slow as the economy weakens and defaults increase, according to UBS AG. About 60 percent of Hang Seng China index companies tracked by Bloomberg have posted fourth-quarter results that trailed analyst estimates.


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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu