(Bloomberg) -- Chinese stock traders unwound their short positions at the fastest pace since February, taking advantage of an equity selloff to close trades ahead of a deadline imposed by regulators.
The combined outstanding amount of short positions in Shanghai and Shenzhen contracted by 14% from the end of last week to 25.1 billion yuan ($3.5 billion) as of Thursday, the lowest since May 2020, Bloomberg-compiled data show. It’s also set for the biggest weekly decline since February.
Chinese stocks rose in the runup to the Communist Party’s Third Plenum earlier this month, a key political meeting, with the aid of state fund purchases. That hurt short trades, before shares slumped from July 22 on disappointment with a lack of strong economic stimulus or reform plans from the meeting.
Traders also need to return borrowed shares to China Securities Finance Corp., the biggest stock lending provider, before a Sept. 30 deadline that was part of the harsh measures announced earlier this month to restrict short selling and quantitative trading strategies.
(Updates with more details)
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