The top five shorts and covers over the last week in Asia

9 Apr, 2020 20:40
source: Singularity Financial

Singularity Financial Hong Kong April 9, 2020 – by David Lee

With markets still down nearly -22% since Feb. 21st, short sellers are looking to realize some of their mark-to-market gains over the past week. Shorts are up $357 billion, +29%, in aggregate mark-to-market profits since February 21st.

Short sellers with major gains in stocks such as Tesla (TSLA US), Boeing (BA US), Luckin Coffee (LK US), AMS AG (AMS AV), Cineworld Group (CINE LN) or ThyssenKrupp (TKA GR) will be looking for exit points before their mark-to-market profits disappear into thin air.

According to a recent analytics report by S3, we’ve seen almost $34 billion in net short covering over the last week, reducing worldwide short interest to $1.21 trillion, a decrease of -2.74%.

In Asia, “after short interest in 2327 TT declined for the first three weeks in March, we are seeing new short selling over the last week in the Taiwanese electronic component maker as supply chain slowdowns due to retail weakness may negatively affect its near term sales. Short interest in 005930 KS climbed steadily through all of March, but we are seeing some position trimming in April even though shorts are up +22% in Feb\March\April. Shorts in 068270 KS are down -20% in Feb\March\April and we are beginning to see a short squeeze in this biotech giant, we should see continued short covering as Celltrion’s stock price continues to rally”, written by S3 CEO on 

The following charts show the top five shorts and covers over the last week in Hong Kong stock market.

Last Thursday, news of a possible accounting fraud in Luckin Coffee Inc (LK US) hit the newswire, driving LK’s stock price down over 75%.

LK short interest was $240 million, 37.92% of its float, and shorts are up $1.14 billion in net-of-financing mark-to-market profits in 2020. Shorts were up +$687 million in mark-to-market profits on Thursday’s price drop, or 60% of their yearly profits in just one day.

Even with increased short selling demand, LK’s number should not increase dramatically as there is not a significant number of shares left available to borrow – shares shorted should not change much no matter how profitable the trade may be in the future.

According to S3’s Hong Kong/China short activities weekly report as of April 3, Ping An Insurance, Alibaba, Tencent, Pinduoduo and JD.com continue to lead the league tables as both short portfolio hedges and short Alpha plays in the HK\Chinese market.