Hong Kong Short Squeeze Is Rising Risk for Morgan Stanley Quants
- Quant team says investors may soon cover bearish positions
- Low investor positioning, further stimulus may trigger move
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The amount of bearish bets against Hong Kong stocks has risen to levels that could trigger a surge in share prices as traders rush to close out their positions, according to quantitative analysts at Morgan Stanley.
Hedge funds and other short sellers say they’re either covering bearish wagers or planning to do so, strategist Gilbert Wong wrote in emailed comments Wednesday. Short-selling activity was running at just under 20% of total turnover on the city’s stock market this week, a level not seen since May, calculations by Bloomberg based on exchange data showed.