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Hong Kong stocks: baggy shorts are vulnerable to shrinkage

Regulatory risks remain high for Chinese tech groups that dominate city’s benchmark index

Short bets on Hong Kong stocks have hit a historic high. The trade has been a profitable one so far, with the city’s benchmark Hang Seng index down nearly a quarter in the past year. That has made short selling Hong Kong stocks look a surer bet than it really is.

Short-selling trades as a proportion of the total turnover on the Hong Kong’s stock market this week climbed to a record 23 per cent this week, according to Bloomberg data.

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