Short sellers retreat, short selling activity in the Hong Kong stock market hits the lowest level since 2021
Billy Leung, the investment strategist at Global X ETFs, stated that the risk-return profile of the mainland China and Hong Kong stock markets is currently skewed to the upside. "This means that the risk of shorting is higher now, so short positions should be reduced."
Under a series of stimulating policies in the recent period, the Hong Kong stock market has continued to strengthen, with short positions significantly reduced, and short selling activity has dropped to the lowest level in three and a half years.
Data from the Hong Kong Exchanges and Clearing Limited (HKEX) shows that last Friday, short selling volume in the Hong Kong stock market accounted for only 9.7% of the total market turnover, hitting a new low since April 2021. Although it rebounded slightly to 10.7% on Monday, the overall short selling sentiment remains low.
Today, the Hong Kong stock market opened lower and then rose. As of the time of writing, the Hang Seng Index (HSI) rose by 0.26%; the Hang Seng TECH Index rose by 0.75%.
Since hitting a bottom in September this year, the Hang Seng Index has rebounded by 20%, mainly attributed to a series of recent stimulus measures that have boosted market confidence, including reserve requirement ratio cuts, interest rate cuts, and relaxation of the real estate market.
Billy Leung, an investment strategist at Global X ETFs, stated that the risk-return ratio of the mainland China and Hong Kong stock markets currently leans towards the upside:
"This means that the risk of short selling is higher now, hence the reduction in short positions."