Market correction led to short selling of financial stocks
HKEx and bank shares most heavily sold after plunge in Shanghai and Hong Kong markets
The short selling of Hong Kong stocks over the past two days was largely related to Thursday's sharp market correction, with financial institutions and Hong Kong Exchanges and Clearing (HKEx) among the most heavily sold.
On Thursday, the Shanghai Composite Index plunged 6.5 per cent while the Hang Seng Index dropped 2.23 per cent in its biggest one-day fall since December. Yesterday, the Shanghai Composite Index fell just 0.18 per cent, while the Hang Seng Index dipped 0.11 per cent.
Ping An Insurance saw heavy short selling with turnover of HK$1.23 billion on Thursday. The mainland insurer was also one of the more heavily shorted stocks yesterday, with turnover of HK$371.18 million.
Louis Tse, a director of VC Brokerage, said there tended to be short selling of a stock when investors believed its stock price was peaking out.
Ping An's share price fell 4.1 per cent on Thursday and another 1.9 per cent to HK$114.10 yesterday.
China Construction Bank was the stock with the most short selling yesterday, with turnover of HK$1.15 billion. Industrial and Commercial Bank of China was also among the most short sold yesterday, with turnover of HK$203.68 million.
Both state-owned banks placed announcements on the website of the Shanghai Stock Exchange on Thursday night confirming state-owned investment firm Central Huijin Investment had sold their A shares. Analysts said earlier reports of the sell-down was one reason for Thursday's market correction.
