20181112-中国银河国际证券-Short_Selling_Analysis_for_November_2_6页_1mb

Short Selling Analysis for November 2

Core Content

This report provides an analysis of short selling activity in Hong Kong stocks based on three key criteria:

• Net change in short positions between October 26 and November 2
• Short positions as a percentage of free float
• Absolute amount of short positions

The analysis focuses on the companies with significant changes in short positions and highlights those that may be vulnerable to short-selling pressure. It also notes companies with a notable decline in short positions, indicating a potential shift in market sentiment. The data is sourced from the Hong Kong Securities Clearing Company (HKSC) and the Hong Kong Exchange (HKEx), with an emphasis on the HKSCF data that provides outstanding short positions.

Key Companies Highlighted

BOC Aviation (2588.HK)

• Short positions increased by 16.9% during the week ended November 2.
• Outstanding short positions represented 3.09% of its free float.
• The 5-day moving average short-selling amount rose from HK$6.96m to HK$8.36m during the week ended November 9.
• The share price has risen by >25% since August, suggesting a potential upward trend despite increased short positions.
• Recommendation: Close monitoring is advised due to the rise in short positions and the relatively high percentage of free float.

Melco International (0200.HK)

• Short positions fell by 19.1% during the week ended November 2.
• Outstanding short positions accounted for 4.92% of its free float.
• The 5-day moving average short-selling amount dropped from HK$7.97m to HK$6.13m during the week ended November 9.
• This decline suggests a positive shift in sentiment or reduced short-selling pressure.
• Recommendation: The decline in short positions is a positive sign for investors.

Data Source and Limitations

• The HKSCF releases aggregate short positions data every Friday with a one-week delay.
• The HKEx provides daily short-selling activity data, but it does not specify whether short positions are covered.
• The usefulness of the HKSCF data lies in its ability to track the net change in short positions on a weekly basis.
• However, the data does not cover short-selling activity using OTC derivative products, which is a known limitation.

Three Angles for Analysis

1. Net change in short positions between October 26 and November 2:

   • This metric helps identify companies that are experiencing a surge or decline in short selling activity.
   • For example, BOC Aviation showed a significant increase in short positions, while Melco International saw a decrease.

2. Short positions as a percentage of free float:

   • This indicates the relative size of short positions in relation to the company’s total available shares.
   • A higher percentage may suggest increased bearish sentiment or potential volatility.
   • BOC Aviation had 3.09%, which is a relatively high level compared to other companies.

3. Absolute amount of short positions:

   • This provides an understanding of the scale of short selling activity.
   • The 5-day moving average is used to track the trend in short-selling amounts over time.
   • For instance, BOC Aviation’s short-selling amount increased from HK$6.96m to HK$8.36m.

Summary of Findings

• BOC Aviation is flagged for close monitoring due to the significant increase in short positions and the relatively high percentage of free float.
• Melco International shows a substantial decrease in short positions, which may indicate a positive shift in investor sentiment.
• The analysis is based purely on quantitative data and does not imply any judgment on corporate governance or fundamentals.
• The HKSCF data is useful for tracking net changes in short positions, but it has limitations in covering all short-selling activities, particularly those involving OTC derivatives.

Authors and Contact Information

• Wong Chi Man – Head of Research

  • Email: cmwong@chinastock.com.hk
  • Phone: (852) 3698-6317

• Mark Lau – Research Analyst

  • Email: marklau@chinastock.com.hk
  • Phone: (852) 3698-6393

Conclusion

The analysis highlights the importance of monitoring short selling activity as a tool to gauge market sentiment and potential volatility. While the data provides valuable insights, it is essential to recognize its limitations and consider it as a complement to other fundamental and qualitative analyses.