When NVIDIA’s stock dropped, Chinese tech stocks jumped 20%, pulling money from U.S. AI to China. The Hang Seng rose, while short interest fell as investors covered losses. Unlike past gains from stimulus, this rally is tech-driven, leaving other Asian markets flat year-to-date.

When NVDA sold off due to deep search, Chinese tech surged 20%. It wasn’t just a loss but a shift of funds from US AI to Chinese AI.

As the sector rallied, short interest dropped as investors covered losing shorts.

For the second time in months, the Hang Seng rose 20%, this time driven by tech stocks, while the rest of Asia remained flat YTD. Previously, it was a Chinese stimulus story, not a tech story.

This time driven by the tech stocks the hang Sang is up 20% TD with the rest of Asian markets flat YTD. The first time it was a Chinese stimulus story not a tech story.

The graph shows that Hong Kong ang H Shares are up but China is not. China is not participating.

The FXI is an ETF with exposure to big Chinese stocks through the H shares. FXI has 46% of float short and has high squeeze risk.

However it is an ETF so the float is not fixed but the numbers are quite alarming.

EWH is only 10% shorted.

The dynamic for ETFs are different in that the float isn’t fixed and FXI is a crowded short.

The short interest is falling as the stock rallies like a squeeze.

While ETFs don’t squeeze like stocks, we can still use the same tools.

The stock is crowded, with a high squeeze score.

US vs. China tech will be a major story moving forward.

NVDAs short position didn’t change when the stock sold off.

The research underscores a pivotal capital shift from NVIDIA to Chinese tech, propelling the Hang Seng up 20% year-to-date. Declining short interest reflects a squeeze-like rally, distinct from prior stimulus-driven gains, with U.S.-China tech divergence poised to shape future market narratives.

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