Short sellers are aggressively targeting the Hong Kong-listed shares of Contemporary Amperex Technology Co Ltd (CATL), per data from S&P Global Markets Intelligence, despite a sharp rally and surging borrowing costs, according to a report by Bloomberg.
Short interest in the Chinese battery giant has climbed to 42% of free float, nearly doubling since June, even as CATL’s shares have soared 50% over the past two months. At the same time, borrowing fees for shorts have jumped from 2% to over 10% per annum, reflecting intense demand to bet against the stock.
While CATL has gained 76% since its May debut in Hong Kong, surpassing analyst targets, bearish sentiment is building among hedge funds and other short sellers. Reasons cited include concerns over high valuations, intensifying EV battery market competition, and potential geopolitical and raw material pricing risks, according to S&P’s Matthew Chessum.
Some hedge funds are also using a cross-market arbitrage strategy, shorting the H-shares in Hong Kong to exploit the 45% price premium they command over CATL’s Shenzhen-listed A-shares.
However, execution risk is rising. With utilisation rates topping 86%, borrowing CATL shares has become increasingly difficult and costly, limiting the potential for new short positions.
