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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Pogeu Mahone who wrote (134576)	7/13/2017 7:53:59 PM
From: TobagoJack	1 Recommendation Recommended By John Pitera Respond to of 220562

re <<What is the best way to short the Hong Kong market?>> ... borrow shares by arrangement from full service broker, but i do not recommend shorting hk, and only suggest wait for fall to pickup for the ramp ... the market had historically been rigged at critical junctures frustrating bears to bad end ft.com Hong Kong stocks: caught short Bears will have more targets if mainland shares are admitted to MSCI indices 2 hours ago Short sellers taking aim at Chinese companies listed in Hong Kong is not new, but the targets are getting bigger © BloombergShort sellers have returned to Hong Kong with a vengeance. A buoyant stock market has given bears confidence in their ability to pick attractive entry levels for trades. Poor transparency and weak governance can make the strategy very effective. Tongda Group, the Chinese electronics manufacturer, dropped 19 per cent on Tuesday amid heavy shorting before recovering half the loss. Other examples include Huishan Dairy, which recorded a 90 per cent drop in an hour in March. The frictions are not new. A first wave of short selling hit in 2011, including Muddy Waters’ campaign against Toronto-listed Sino Forest. The resurgence of short selling has coincided with the Hang Seng index returning to similarly high levels after a 40 per cent rally since the start of 2016. Speculating on declining share prices is risky. Bears do not just have to worry about shares rising. Borrowing the stock to sell can be costly too. Hong Kong-listed companies can ask for trading in their shares to be suspended. This can lock in losses for long periods. But poor and sometimes unreliable disclosures make it easy for bears to rattle investors’ nerves. They distrust financial reports from some of the mainland Chinese companies that account for three-quarters of Hong Kong’s listed stocks. Limited liquidity increases sellers’ market impact and leads to higher volatility. Big price drops mean large profits for the sellers. Some improvement may be coming. In the aftermath of April’s Trump-Xi summit a plan was announced to give US rating agencies access to the Chinese market. This would be a step in the right direction, although it would mainly benefit credit investors. More importantly for equity investors, MSCI has said it will decide whether to include mainland listed shares in its emerging market indices in June. That would invite greater scrutiny, and eventually to improved disclosure. But it may also bring more liquidity in the shape of index-tracking funds. These have drawn complaints they unwittingly pump up shares in poor-quality companies — giving short sellers even more targets. Lex welcomes discussion with readers. Do you think short sellers are a disruptive force, or more vital than ever in an era of passive investing and high-frequency trading? Please let us know what you think in the comments section below. Email the Lex team at lex@ft.com