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Short Sellers Face Off Against Chinese Money in Hong Kong

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Short sellers are taking on Chinese investors in Hong Kong’s equity market.

Mainland individuals are using the Shanghai link to pump money into a handful of Hong Kong companies, sending prices soaring. In the other corner: short sellers, who see gravity-defying share charts. They’ve piled bearish bets on some of Chinese investors’ favorite targets, including Gome Electrical Appliances Holding Ltd. and Shanghai Electric Group Co. Among the 10 most-traded link stocks on Monday, an average 4.2 percent of outstanding shares were sold short, Markit Group Ltd. data show. That’s triple the Hong Kong market average.