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China stock bears push short bets to record high as tech clampdown, policy tightening and Huarong add to CICC’s five sell signals

  • The combined value of stock shorts on two mainland bourses reached a record 152 billion yuan (US$23.4 billion) on Tuesday
  • Concerns about distress at China Huarong Asset Management have added to bearish sentiment around antitrust clampdown and policy tightening risks

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A man wearing a protective mask is seen inside the Shanghai Stock Exchange building. Photo: Reuters
Zhang Shidong

China stock bears have driven up short bets to an all-time high this week, reflecting demand for hedging against the risks of policy tightening and further fallout from the nation’s antitrust crackdown on technology companies.

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The combined value of stock shorts on the Shanghai and Shenzhen stock exchanges climbed to 152 billion yuan (US$23.4 billion) on Tuesday, according to data published by state agency China Securities Finance. That’s the highest since local brokerages were allowed to officially start securities lending and borrowing in 2010.

The bearish bets came after China’s economic growth accelerated to 18.3 per cent in the first quarter in a full recovery from the pandemic, raising expectations that policymakers will further put the brakes on excessive credit expansion.
Since late last year, Beijing has also been stepping up its scrutiny of Internet-platform operators. A months-long probe into anti-monopoly practices culminated this month in a record US$2.8 billion fine being imposed on e-commerce group Alibaba Group Holding, which is also the owner of this newspaper.

“There are near-term risks in China including an anti-monopoly drive that threatens large-cap Internet companies that push us to favour more cyclical and domestically oriented exposures,” strategists including Wei Li at BlackRock wrote in a report on April 19. BlackRock manages about US$8.7 trillion globally.

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