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[text/observer network xiong chaoran] on the eve of the national day, china introduced a combination of policies, and the a-share market ushered in a surge. although the a-share market was closed due to the national day holiday, in the us stock market, chinese concept stocks still performed strongly and continued their surge.

bloomberg reported on october 1, local time, that a report from market analysis company s3 partners pointed out that while china’s stock market has surged due to policy-driven gains, traders who shorted chinese concept stocks listed in the united states have suffered losses in this market. at about $6.9 billion, this wiped out short sellers’ gains of about $3.7 billion so far this year, leaving them with current paper losses of about $3.2 billion.

“before the recent rally, short sellers had been building positions,” ihor dusaniwsky, managing director of predictive analytics at s3 partners, said in a report. since the rally, however, the short-selling activity in the sector has slowed.

bloomberg said that before the recent policy measures were introduced, some people intended to label the chinese stock market as "uninvestable", but data from s3 partners showed that the stock prices of alibaba and jd.com have skyrocketed, causing these short sellers to suffer heavy losses and pain. extremely. in the past five days, alibaba's stock price has risen nearly 20%.

alibaba stock price trend in the past 5 days google

according to the report, despite the recent rebound in u.s.-listed chinese stocks, data shows that short sellers are not rushing to cover their positions. however, if the market continues to rise, s3 partners expects "significant short covering in the sector," pushing the share price even higher.

"if short covering begins on a large scale, alibaba's stock price will likely be affected the most, as the stock has seen increased short selling during this rally," dusanievsky said. he added: " with short selling no longer able to offset some of the long buying pressure on the stock, covering buying alongside long buying could make the move steeper if the stock price moves."

from the "three arrows" of the central bank to the introduction of new policies for the entry of medium and long-term funds into the market, the policy combination in the week before the national day was very powerful: on september 24, the heads of the three departments of the central bank, the state administration of financial supervision and the china securities regulatory commission announced that a number of financial policies will be forthcoming release. among them, the 20 basis points reduction in policy interest rates is the largest in the past four years, and the existing mortgage interest rates are expected to be reduced by an average of 0.5 percentage points, which is expected to benefit 150 million people. on september 26, the political bureau of the cpc central committee held a meeting and pointed out that we must seize key points and take proactive actions to effectively implement existing policies, step up efforts to launch incremental policies, further improve the pertinence and effectiveness of policy measures, and strive to complete the economic and social goals throughout the year. development goals and tasks. the next day, the rrr cut and interest rate cut were officially implemented.

under the release of a series of major policies, the a-share market rebounded strongly before the national day. from september 24th to 27th, the a-share market experienced large volume increases across the board for four consecutive days. september 30 was the last trading day before the holiday. a-shares continued to surge in volume. the transaction volume of the shanghai and shenzhen stock exchanges exceeded 2,362.6 billion yuan that afternoon, setting a new record for the highest transaction volume set on may 28, 2015.

currently, the csi 300 index has risen by more than 27% from its low on september 13, while the nasdaq golden dragon china index, which tracks the performance of chinese concept stocks, has soared by more than 36%. on october 2, local time, chinese concept stocks continued to surge. the nasdaq china golden dragon index rose 4.93%. it has risen for five consecutive trading days and closed at the highest level since february last year. it closed above 8,000 points for the first time.

on september 30, 2024, in shanghai, a large screen displayed stock market conditions. ic photo

reuters noted on october 1 that with major changes in market sentiment, global investors are preparing to return to the chinese market and bet on china again. according to the report, the total client funds managed by these investors' investment institutions exceed us$1.5 trillion. they believe that china's measures to attract more funds into the market and stimulate consumer spending have boosted the attractiveness of chinese companies' valuations.

"in just eight days, china has regained the dominant position in emerging markets that it lost in the past 10 months." bloomberg also pointed out on october 1 that since the federal reserve announced an interest rate cut on september 18, and china subsequently launched a "big move" in stimulus policies, , the market value of china's stock market (including hong kong stocks) has soared by us$3.2 trillion (approximately rmb 22.5 trillion), which has promoted the increase in china's weight in emerging market stock indexes.

at the same time, bloomberg observed in another article analyzing the chinese economy that hedge funds are also pouring into the chinese stock market at a record rate, seeking investment opportunities in any way, betting that china's stimulus policies will accelerate the economy recovery.

according to reports, this rebound is stimulating optimism about the end of the downturn in china's stock market and is now attracting many big-name institutions in the fund industry. billionaire investor david tepper is buying more china-related assets, while blackrock, the world's largest money manager, is also increasing its holdings of chinese stocks.

bloomberg said the rebound was so violent that some quantitative hedge funds that had previously shorted were said to be facing margin calls. amid heightened investor interest, some fund managers have also placed caps on how much retail investors can buy.

"investors don't even need to pick stocks now." chauwei yak, ceo of gao capital: "we previously reduced our net exposure to china through arbitrage strategies, but now we have turned long."