Hedge Funds

Cost of shorting in Hong Kong doubles as China bearishness builds


Hedging is harder than ever as funds target the same sectors.

 Source: Data Explorers
Investors bearish on China say there have never been more overheated stocks to short. There’s just one problem: It’s getting more expensive to bet against them.

Hong Kong’s market—where many go to express negative views on Chinese firms listed on the local exchange—is so tight that the cost of shorting has more than doubled in the past year.

Managers now pay nearly 2% on average to borrow a Hong Kong security—10 times the price of an equivalent trade in the U.S. and Europe, and four times the cost in Tokyo,