S3 said that China’s suppression may stimulate new short sales of US listed stocks.

(Reuters)-According to reports, after the short positions were forced to liquidate earlier this year, China’s suppression of domestic companies listed on the US stock market may become the fuse for a new round of short selling by Hong Kong and Chinese companies. Analysis company S3 Partners.

This year, the short equity of a group of such stocks has fallen from US$50.6 billion to US$43.5 billion, and the percentage of short equity in the liquidity has dropped from 5.67% to 3.81%, reflecting that some of the loss-making positions were liquidated at 1% after the market rebounded. In December and February, Ihor Dusaniwsky, managing director of predictive analytics at S3, said in a report.

However, shorts who bet on future stock price declines are now profiting as a whole for the whole year, indicating that hedge funds and other speculators now have room to bet on more losses after the crackdown was launched last week.

Dusaniwsky said: “In general, the US-listed Hong Kong and China Securities have been profitable short positions in 2021, although it was only in June that the January/February market value loss was eliminated.

“We should expect more short sales and reductions in short covering.”

Invesco Golden Dragon China ETF, which tracks companies listed on the U.S. exchange headquartered in China, has fallen by a third from its February high.

On Wednesday, Chinese market regulators fined a number of Internet companies such as Didi Global and Tencent Holdings (OTC:) Ltd. Alibaba (New York Stock Exchange:) Group Holdings Limited failed to report early M&A transactions for approval.

Didi’s share price has fallen another 4.3%, and after a US$4.4 billion listing on the New York Stock Exchange on Tuesday, Chinese regulators ordered the company’s app to be delisted. The company’s app has fallen by nearly 20%.

Alibaba ADR rose 0.5%.

BCA Research analysts said: “Global investors will have to strike a balance between the attractiveness of China’s huge potential market and the possibility that officials may change the company’s prospects in one fell swoop.”