The vehicle that tracks large cap stocks in the FTSE China 50 Index is primarily traded as a macro hedge rather than fundamental play, with short interest acting as a clear signal of that role.

Hedge build: Short interest increased from 35mm shares at the end of 2023, to a peak of 125mm shares early 2025, reflecting rising demand for FXI as a liquid hedge against China policy uncertainty and slowing growth.

Hedge unwind: As FXI price stabilized and then advanced into the mid-high $30/share range, short interest fell sharply, declining to new multi-year low of 37mm shares, as the hedge lost effectiveness and became increasingly costly to maintain.

What’s next: With hedge positioning mostly cleared, FXI is no longer weighed down by structural shorting, with downside risk now increasingly dependent on macro news.

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