World News

China’s stocks short-selling at a record high

SHANGHAI (Reuters) – The value of shares that investors in China’s onshore stock markets have borrowed to sell short held close to record levels set last week, amid bearishness over the new coronavirus pandemic, market data released on Tuesday showed.

The value of shares used for shortselling was around 20 billion yuan ($2.83 billion) on Monday, just a touch below the record 20.3 billion yuan set on April 9, according to the latest data from China Securities Finance Corporation, a financial institution cofounded by Shanghai Stock Exchange and Shenzhen Stock Exchange.

That is double the level seen before the Chinese Lunar New Year holiday, when the scare over the epidemic in China began impacting global markets.

China’s benchmark Shanghai stock index <.SSEC> has lost 7% so far this year.

Among the shares most targeted for short-selling by Chinese investors were Kweichow Moutai <600519.SS>, the country’s largest liquor maker by market capitalisation, and an ETF tracking China’s CSI300 blue-chip index <510300.SS>.

The data showed stocks on China’s newly launched STAR Market, were more heavily shorted than main board peers, as investors have more ways to borrow stocks in the STAR Market.

Despite being at record levels, the shortselling has little impact as China’s stock markets have a total market capitalisation of more than $8 trillion, according to Song Jing, analyst with Nomura Orient International Securities.

The amount of shortselling is also dwarfed by the near 1 trillion yuan worth of stock purchases investors have made on margin, wherein they borrow to fund these investments, revealing the heavy skew in the country’s equities market.

(Reporting by Luoyan Liu and Andrew Galbraith; Editing by Vidya Ranganathan)