Short sellers are buying positions in Chinese stocks amid coronavirus

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$337 million.

That’s the increase in U.S. traded Chinese/Hong Kong shares short interest since the coronavirus outbreak was confirmed on Jan. 20. As of January 29th, 7900 cases have been reported and 1771 fatalities. This figure from S3 Partners includes shorting of ETF shares worth $62 million and equities worth $275 million. 

The following are the stocks with the largest amount of new short selling:

Source: S3 Partners.

The top China-centric ETFs being targeted by short sellers include the ISHS MSCI China ETF (MCHI), ISHS China Large Cap ETF (FXI), Kraneshs CSI China Internet Fund ETF (KWEB) and SPDR S&P China ETF (GXC).

 We expect short selling to continue with the larger market cap securities leading the pack, especially with the Chinese markets closed,” said S3 Partners Managing Director Predictive Analytics Ihor Dusaniwsky. “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.”

Chinese stock markets have been on an extended closure since the Lunar New Year holiday as health officials try to contain the outbreak. Travel restrictions are in place throughout China’s major cities and health screenings are increasing at major airports in Asia and Europe.

Source: Investopedia

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