LB Select
2023.09.28 07:26
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NIO leads the decline by more than 17%! Why are Chinese concept stocks so miserable in September?

In September, short positions in US-listed Chinese stocks reached a new high in a year! NIO, Alibaba, and Pinduoduo were the most heavily shorted stocks this month, while Xpeng and Li Auto, the two new energy vehicle stocks, saw the most short positions being covered.

Why did Chinese concept stocks fall so much in September?

In the past month of September, the Nasdaq Golden Dragon China Index, which is mainly composed of Chinese concept stocks listed in the US, fell more than 7%, underperforming the Nasdaq Index.

Among them, NIO fell more than 17% in the month, Li Auto fell more than 16%, fell nearly 13%, Bilibili fell more than 10%, and star tech stocks such as Alibaba, Pinduoduo, and XPeng all fell.

On the one hand, the hawkish stance of the Federal Reserve and the expectation of long-term higher interest rates continue to put pressure on the market; on the other hand, global hedge funds have placed significant bearish bets on Chinese concept stocks.

According to IHS Markit data cited by Morgan Stanley, as of September 22, the short positions in Chinese ADRs added this month amounted to $2.1 billion, the highest monthly short selling volume in 2023.

Among them, NIO, Alibaba, and Pinduoduo are the most shorted stocks this month. As of now, NIO has a short interest flow of $867 million, Pinduoduo has $675 million, and Alibaba has $300 million.

In addition, the short positions of XPeng and Li Auto, two new energy vehicle stocks, have been covered the most, with positions reaching $141 million and $49.5 million, respectively.

As for long positions, Morgan Stanley stated that there have been relatively small changes in global investors' allocation to Chinese stocks due to their currently low exposure.