Hong Kong now Asia's top short selling market

The Hong Kong stock exchange overtook Japan as Asia’s most lucrative market for short selling, Bloomberg reported. Pension, mutual funds and banks took in US$245 million over the past year from loaning out shares on the Hong Kong market, compared with US$241 million gained from short sales of Japanese equities. The short selling market has been bolstered by investor interest in Chinese securities. Analysts say this is not necessarily an indication that investors have grown pessimistic toward Chinese shares, pointing out that short-selling is also a function of arbitrage and hedging. Firms lending Hong Kong equities can charge higher interest rates – usually 1.5% annually – because investor demand is growing and the city has fewer listed companies than Japan. Hong Kong recently overtook New York and London to become the world’s top market for IPO launches.