In the third quarter we saw short interest in the HK\China region decline $24.9 billion from $88.5 billion to $63.6 billion. There was $1.5 billion of short covering in addition to a $23.4 billion mark-to-market decline in the value of shares shorted. But there were several industries that saw increased short selling.

Short Interest by Industry: Hong Kong and China (as of 10.06.22)

Industry

6/30/2022

9/30/2022

Change Short Int

Change Shares Shorted

Change MTM

Automobiles & Components

$6,760,946,757

$4,374,970,003

($2,385,976,754)

$247,147,957

($2,633,124,711)

Banks

$5,228,527,242

$3,764,667,788

($1,463,859,454)

($263,390,448)

($1,200,469,006)

Capital Goods

$2,302,456,550

$1,958,257,123

($344,199,427)

$150,181,220

($494,380,647)

Commercial & Professional Services

$109,898,687

$84,145,838

($25,752,849)

$14,059,624

($39,812,473)

Consumer Durables & Apparel

$3,014,895,578

$2,028,373,119

($986,522,459)

($398,360,433)

($588,162,026)

Consumer Services

$5,253,006,623

$4,407,047,262

($845,959,361)

($206,849,584)

($639,109,777)

Diversified Financials

$2,150,035,928

$1,713,649,641

($436,386,287)

$184,157,370

($620,543,657)

Energy

$1,172,548,305

$1,431,152,819

$258,604,514

$219,957,160

$38,647,354

Food & Staples Retailing

$95,287,254

$50,901,526

($44,385,728)

($25,556,484)

($18,829,244)

Food Beverage & Tobacco

$3,869,263,766

$2,453,987,511

($1,415,276,255)

($573,264,082)

($842,012,173)

Health Care Equipment & Services

$1,444,541,800

$933,908,846

($510,632,954)

($67,140,492)

($443,492,462)

Household & Personal Products

$267,828,423

$206,255,191

($61,573,232)

($37,154,392)

($24,418,840)

Insurance

$5,104,529,041

$3,467,724,673

($1,636,804,368)

($340,354,317)

($1,296,450,051)

Materials

$2,383,352,422

$1,747,780,607

($635,571,815)

$9,188,198

($644,760,013)

Media & Entertainment

$10,741,973,634

$6,619,034,689

($4,122,938,945)

($1,060,633,009)

($3,062,305,936)

Pharmaceuticals Biotechnology & Life Sciences

$3,825,489,148

$2,438,871,398

($1,386,617,750)

($268,147,748)

($1,118,470,002)

Real Estate

$5,391,100,603

$4,230,316,439

($1,160,784,164)

$752,285,374

($1,913,069,538)

Retailing

$16,638,626,408

$11,909,537,843

($4,729,088,565)

($305,355,561)

($4,423,733,004)

Semiconductors & Semiconductor Equipment

$2,014,886,456

$1,245,849,944

($769,036,512)

($166,873,422)

($602,163,090)

Software & Services

$1,489,502,033

$963,577,284

($525,924,749)

$132,259,799

($658,184,548)

SPAC

$6,144,414

$8,397,640

$2,253,226

$2,389,100

($135,874)

Technology Hardware & Equipment

$3,723,290,083

$2,436,881,804

($1,286,408,279)

($151,829,887)

($1,134,578,392)

Telecommunication Services

$297,254,945

$267,154,995

($30,099,950)

$9,351,621

($39,451,571)

Transportation

$2,874,379,709

$2,999,941,840

$125,562,131

$617,909,750

($492,347,619)

Utilities

$2,366,700,407

$1,866,705,695

($499,994,712)

$11,775,697

($511,770,409)

Total HK\China Industry Group Short Interest

$88,526,466,215

$63,609,091,519

($24,917,374,696)

($1,514,246,987)

($23,403,127,709)

Short interest in the HK\China Real Estate sector has been declining for most of 2022, but it would be incorrect to think that short sellers were trimming their positions. While total short interest in the sector declined by $1.4 billion, we saw $843 million of additional short selling partially offsetting $2.3 billion of mark-to-market decline in their shares shorted.

The Real Estate Industry had the largest increase in short selling in the third quarter with $742 million of new short selling partially offsetting a $1.9 billion decline in the mark-to-market value of shares shorted. Short sellers were backing up their winning short bets as stock prices in the sector declined by over 35%.

The Largest Shorts in the HK\China Real Estate Sector (as of 10.06.22)

Name

Ticker

SI % Float

S3 SI % Float

Fee

Short Interest

KE HOLDINGS INC ADR

BEKE US

4.22%

4.05%

0.30%

$ 868,958,029

CHINA OVERSEAS LAND & INVEST

688 HK

2.69%

2.62%

0.50%

$ 259,541,729

WHARF REAL ESTATE INVESTMENT CO

1997 HK

3.12%

3.03%

0.50%

$ 219,522,588

CHINA RESOURCES LAND LTD

1109 HK

1.78%

1.75%

0.50%

$ 202,383,888

COUNTRY GARDEN HOLDINGS CO

2007 HK

10.74%

9.70%

1.50%

$ 201,896,237

LONGFOR GROUP HOLDINGS LTD

960 HK

4.31%

4.13%

0.50%

$ 197,724,657

LINK REIT

823 HK

1.20%

1.19%

0.50%

$ 177,132,888

SUN HUNG KAI PROPERTIES

16 HK

0.85%

0.84%

0.50%

$ 156,682,548

COUNTRY GARDEN SERVICES

6098 HK

4.92%

4.69%

0.50%

$ 137,781,090

CHINA VANKE CO LTD

2202 HK

3.49%

3.37%

0.50%

$ 119,661,208

ESR CAYMAN LTD

1821 HK

1.90%

1.87%

0.50%

$ 117,449,003

CK ASSET HOLDINGS LTD

1113 HK

0.84%

0.50%

$ 98,793,202

ALIVING SMART CITY SERVICES CO LTD

3319 HK

17.72%

15.05%

0.50%

$ 96,723,707

SWIRE PACIFIC LTD

19 HK

2.33%

2.28%

0.50%

$ 80,591,729

HOPSON DEVELOPMENT HOLDINGS LTD

754 HK

10.10%

9.18%

1.50%

$ 72,123,706

WHARF HOLDINGS LTD

4 HK

2.34%

2.28%

0.50%

$ 71,474,373

GREENTOWN CHINA HLDGS LTD

3900 HK

4.26%

4.08%

0.50%

$ 71,237,886

NEW WORLD DEVELOPMENT

17 HK

1.79%

1.76%

0.50%

$ 69,505,436

HENDERSON LAND DEVELOPMENT

12 HK

1.89%

1.85%

0.50%

$ 69,384,624

CIFI H0LDINGS GROUP CO LTD

884 HK

14.04%

12.31%

5.00%

$ 62,461,199

Total Sector

4.09%

3.82%

0.99%

$ 4,230,313,439

Real Estate sector stocks with short selling versus short covering were evenly split over the last thirty days with 47% of the 171 stocks with short interest having net short selling while 53% had net short covering. While short sellers put on and took off the same number of chips on the table, the value of the chips differed significantly. Real Estate sector short sellers added $2.8 billion of new exposure on some stocks versus taking off $1.4 billion from others – they were two-to-one more bearish in the sector in dollar terms. Overall, we saw $215 million of additional short selling in the sector over the last thirty days.

HK\China Real Estate Stocks with the Largest Increase in Short Selling

Name

Ticker

SI % Float

S3 SI % Float

Fee

Short Interest

30 Day Change Shares Shorted

KE HOLDINGS INC ADR

BEKE US

4.22%

4.05%

0.30%

$868,958,029

$186,906,776

CHINA OVERSEAS LAND & INVEST

688 HK

2.69%

2.62%

0.50%

$259,541,729

$89,600,668

LONGFOR GROUP HOLDINGS LTD

960 HK

4.31%

4.13%

0.50%

$197,724,657

$41,278,655

CHINA RESOURCES LAND LTD

1109 HK

1.78%

1.75%

0.50%

$202,383,888

$40,938,004

LINK REIT

823 HK

1.20%

1.19%

0.50%

$177,132,888

$24,345,557

ALIVING SMART CITY SERVICES CO LTD

3319 HK

17.72%

15.05%

0.50%

$96,723,707

$22,470,197

ESR CAYMAN LTD

1821 HK

1.90%

1.87%

0.50%

$117,449,003

$20,217,140

GREENTOWN CHINA HLDGS LTD

3900 HK

4.26%

4.08%

0.50%

$71,237,886

$15,579,134

WHARF REAL ESTATE INVESTMENT CO

1997 HK

3.12%

3.03%

0.50%

$219,522,588

$11,927,417

NEW WORLD DEVELOPMENT

17 HK

1.79%

1.76%

0.50%

69,505,436

$10,801,205

HK\China Real Estate Stocks with the Largest Increase in Short Covering

HK\China Real Estate Sector Shares Covered

Ticker

SI % Float

S3 SI % Float

Fee

Short Interest

30 Day Change Shares Covered

SUN HUNG KAI PROPERTIES

16 HK

0.85%

0.84%

0.50%

$156,682,548

$(77,708,989)

COUNTRY GARDEN SERVICES

6098 HK

4.92%

4.69%

0.50%

$137,781,090

$(27,642,868)

COUNTRY GARDEN HOLDINGS CO

2007 HK

10.74%

9.70%

1.50%

$201,896,237

$(26,324,097)

CHINA VANKE CO LTD

2202 HK

3.49%

3.37%

0.50%

$119,661,208

$(23,788,615)

SINO LAND CO LTD

83 HK

0.62%

0.61%

0.50%

$24,851,194

$(20,420,716)

WHARF HOLDINGS LTD

4 HK

2.34%

2.28%

0.50%

$71,474,373

$(14,898,342)

CIFI H0LDINGS GROUP CO LTD

884 HK

14.04%

12.31%

5.00%

$62,461,199

$(12,020,233)

CK ASSET HOLDINGS LTD

1113 HK

0.84%

0.50%

$98,793,202

$(11,108,369)

CIFI EVER SUNSHINE SERVICES GRP LTD

1995 HK

3.37%

3.26%

6.25%

$9,738,027

$(10,181,108)

CHINA RESOURCES MIXC LIFESTYLE SERVICES LTD

1209 HK

1.58%

1.55%

0.50%

$36,285,021

$(9,034,299)

Shorting the HK\China Real Estate sector has been a very profitable trade with short sellers up $2.55 billion in year-to-date mark-to-market profits, up +45.24%. Outperforming the Hang Seng Index which is down -21.21% for the year and the CSI 300 which is down -15.16% for the year.

The Most Profitable HK\China Real Estate Shorts (YTD)

Name

Ticker

Avg Fee

Avg Short Interest

YTD MTM P\L

P\L %

COUNTRY GARDEN HOLDINGS CO

2007 HK

0.95%

$426,920,774

$514,717,901

120.57%

COUNTRY GARDEN SERVICES

6098 HK

0.50%

$298,573,354

$399,457,412

133.79%

CIFI HLDGS GRP

884 HK

1.19%

$138,166,360

$232,575,440

168.33%

SUNAC CHINA HLDGS LTD

1918 HK

1.29%

$173,005,568

$191,139,298

110.48%

LOGAN GROUP CO LTD

3380 HK

15.23%

$62,408,353

$104,852,839

168.01%

ALIVING SMART CITY SERVICES CO LTD

3319 HK

0.50%

$135,999,217

$89,332,078

65.69%

CIFI EVER SUNSHINE SERVICES GRP LTD

1995 HK

1.54%

$66,977,292

$65,148,340

97.27%

LONGFOR GROUP HOLDINGS LTD

960 HK

0.50%

$208,818,536

$62,858,187

30.10%

HOPSON DEVELOPMENT HOLDINGS LTD

754 HK

1.14%

$115,198,683

$54,845,337

47.61%

KE HOLDINGS INC ADR

BEKE US

0.30%

$484,729,952

$49,491,049

10.21%

The Least Profitable HK\China Real Estate Shorts (YTD)

Name

Ticker

Avg Fee

Avg Short Interest

YTD MTM P\L

P\L %

CHINA EVERGRANDE GRP

3333 HK

33.90%

$67,677,105

($16,981,340)

-25.09%

SWIRE PACIFIC LTD-A

19 HK

0.50%

$49,539,883

($15,385,555)

-31.06%

WHARF HOLDINGS LTD

4 HK

0.50%

$89,765,758

($12,447,951)

-13.87%

CHINA OVERSEAS LAND & INVEST

688 HK

0.50%

$184,956,235

($10,993,762)

-5.94%

GREENTOWN CHINA HLDGS LTD

3900 HK

0.64%

$63,228,416

($8,142,901)

-12.88%

YUEXIU PROPERTY CO LTD

123 HK

0.50%

$22,575,252

($6,932,951)

-30.71%

C&D INTERNATIONAL INVESTMENT

1908 HK

0.50%

$17,614,896

($5,872,151)

-33.34%

SINO LAND CO LTD

83 HK

0.50%

$40,100,477

($2,909,967)

-7.26%

KAISA GROUP HOLDINGS LTD

1638 HK

13.15%

$9,225,180

($1,781,800)

-19.31%

SHIMAO GROUP HOLDINGS LTD

SIOPF US

1.23%

$4,171,839

($1,716,023)

-41.13%

Shorting the Real Estate sector continued to be profitable in September with short sellers up $565 million in month—to-date mark-to-market profits, a return of 12.03% on an average short interest of $4.70 billion.

The Most Profitable HK\China Real Estate Shorts (September 2022)

Name

Ticker

Avg Fee

Avg Short Interest

Sept MTM P\L

P\L %

CIFI HLDGS GRP

884 HK

3.99%

$135,463,391

$94,704,576

69.91%

COUNTRY GARDEN HOLDINGS CO

2007 HK

1.61%

$270,694,477

$62,317,104

23.02%

COUNTRY GARDEN SERVICES

6098 HK

0.50%

$186,706,493

$50,569,654

27.09%

LONGFOR GROUP HOLDINGS LTD

960 HK

0.50%

$229,357,132

$32,730,219

14.27%

ALIVING SMART CITY SERVICES CO LTD

3319 HK

0.50%

$97,165,841

$25,497,967

26.24%

HOPSON DEVELOPMENT HOLDINGS LTD

754 HK

1.23%

$87,791,990

$22,679,244

25.83%

KE HOLDINGS INC ADR

BEKE US

0.30%

$821,669,867

$21,362,036

2.60%

LINK REIT

823 HK

0.50%

$190,122,836

$20,483,342

10.77%

SEAZEN GROUP LTD

1030 HK

0.50%

$53,081,576

$17,579,025

33.12%

HENDERSON LAND DEVELOPMENT

12 HK

0.50%

$77,894,698

$14,269,362

18.32%

The Least Profitable HK\China Real Estate Shorts (September 2022)

Name

Ticker

Avg Fee

Avg Short Interest

Sept MTM P\L

P\L %

JINKE SMART SERVICES GROUP CO LTD

9666 HK

1.92%

$25,729,601

($8,699,353)

-33.81%

SWIRE PACIFIC LTD-A

19 HK

0.50%

$79,292,617

($6,221,102)

-7.85%

C&D INTERNATIONAL INVESTMENT

1908 HK

0.53%

$24,654,327

($5,160,246)

-20.93%

SWIRE PACIFIC LTD A

SWRAF US

0.37%

$1,895,313

($146,910)

-7.75%

JINMAO PROPERTY SERVICES CO

816 HK

2.33%

$1,297,737

($98,085)

-7.56%

E-HOUSE CHINA ENTERPRISE HOL

2048 HK

20.12%

$4,179,831

($77,081)

-1.84%

COSMOPOLITAN INTL HLDGS

120 HK

8.38%

$534,808

($57,073)

-10.67%

SWIRE PACIFIC ADR

SWRAY US

3.14%

$672,226

($55,154)

-8.20%

ZHUGUANG HOLDINGS GROUP CO

1176 HK

7.20%

$3,169,206

($22,696)

-0.72%

CD PROPERTY MANAGEMENT GROUP

2156 HK

0.81%

$311,416

($11,016)

-3.54%

There are no truly Crowded shorts in the HK\China Real Estate sector, but there are several that are moderately Crowded.

Most Crowded HK\China Real Estate Shorts

Name

Ticker

S3 Crowded Score

ALIVING SMART CITY SERVICES CO LTD

3319 HK

62.50

REDCO PROPERTIES GROUP LTD

1622 HK

57.50

HOPSON DEVELOPMENT HOLDINGS LTD

754 HK

55.00

GUANGZHOU RF PROPERTIES CO LTD

2777 HK

55.00

COUNTRY GARDEN HOLDINGS CO

2007 HK

47.50

CIFI HLDGS GRP

884 HK

47.50

SEAZEN GROUP LTD

1030 HK

47.50

AGILE GROUP HOLDINGS LTD

3383 HK

47.50

WHARF REAL ESTATE INVESTMENT CO

1997 HK

40.00

SHIMAO SERVICES HOLDINGS LTD

873 HK

40.00

With apartment prices falling, owners still waiting for their properties to be completed and new policies to reduce minimum mortgage rates for first time buyers, the HK\China Real Estate market is in flux and short sellers should continue to be active in one of the more volatile sectors in the HK\China region. Short sellers may not get the performance they earned in their China Evergrande Group (3333 HK) trade, but they are expecting to outperform short selling in the other sectors in the region.