Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Since August 2012, reportable net short positions in Hong Kong at the end of each week are filed with the SFC confidentially and are <a href="https://www.sfc.hk/web/EN/regulatory-functions/market-infrastructure-and-trading/short-position-reporting/aggregated-short-positions-of-specified-shares.html" target="_blank" rel="noopener">published one week</a> after the submission - typically Friday afternoon.
Under the <a href="https://www.hklii.hk/eng/hk/legis/reg/571AJ/" target="_blank" rel="noopener">Securities and Futures (Short Position Reporting) Rules</a>, an investor who, on the last business day of each week, holds a net short position of 0.02% of the "specified shares", or HK$30mn (whichever is lower), is required to report his net short position to the SFC within 2 business days.
The HKEx provides a <a href="https://www.hkex.com.hk/Services/Trading/Securities/Securities-Lists/Designated-Securities-Eligible-for-Short-Selling?sc_lang=en" target="_blank" rel="noopener">list</a> of designated securities eligible for short selling. Since Mar 2017, all stocks are covered, not just stocks in the Hang Seng Index or the Hang Seng China Enterprises Index, as it was previously.
There is a lot of unnecessary noise in these weekly reports on account of the low threshold - just how meaningful is the HK$60mn short in China Mobile with a market cap of HK$1.15tn? Not much.
But I thought it would be useful exercise to see how shorts behaved in 2020, using specific notable points in time as reference points (at the time of the lockdown in Wuhan (23 Jan), the low of stock markets in late March) against where we are now.
As always, more below the fold.

Since August 2012, reportable net short positions in Hong Kong at the end of each week are filed with the SFC confidentially and are published one week after the submission - typically Friday afternoon.
Under the Securities and Futures (Short Position Reporting) Rules, an investor who, on the last business day of each week, holds a net short position of 0.02% of the "specified shares", or HK$30mn (whichever is lower), is required to report his net short position to the SFC within 2 business days.
The HKEx provides a list of designated securities eligible for short selling. Since Mar 2017, all stocks are covered, not just stocks in the Hang Seng Index or the Hang Seng China Enterprises Index, as it was previously.
There is a lot of unnecessary noise in these weekly reports on account of the low threshold - just how meaningful is the HK$60mn short in China Mobile with a market cap of HK$1.15tn? Not much.
But I thought it would be useful exercise to see how shorts behaved in 2020, using specific notable points in time as reference points (at the time of the lockdown in Wuhan (23 Jan), the low of stock markets in late March) against where we are now.
As always, more below the fold.

Hong Kong' Short Interest: From the Wuhan Lockdown, The Market Low, Until Now

Semiconductor & Technology Specialist, Ingenuity

William Keating

Semiconductor & Technology Specialist

Ingenuity

Our focus is exclusively on in-depth research & consulting in the broader semiconductor industry. We focus on the key players, namely Intel, Micron, Qualcomm, Apple, Samsung, NVIDIA, AMD, TSMC & Global Foundries - as well as some of the lesser known, but nonetheless critical, companies such as ASML (for EUV), Mellanox, Cavium, Xilinx etc. We specialise in their products, roadmaps, process technologies, competitive advantages & threats etc. We also help our clients understand the implications of new and emerging technologies, e.g. 3D X-Point, 3D NAND, Carbon Nanotubes, Autonomous Driving, Graphene, Silicon Photonics, Wafer-Level Optics, Artificial Intelligence, FPGA, GPU, ASIC etc. 

Semiconductor Analysis & Research

Thematic (Sector/Industry)

Tensions created by the stalled US-China trade talks along with the recent US embargo on selling to Huawei has shone a spotlight once again on China's efforts to design and manufacture its own supplies of key electronic components, most notably DRAM and NAND. To that end, a recent <a href="https://asia.nikkei.com/Economy/Trade-war/China-set-to-produce-first-locally-designed-DRAM-chip" target="_blank">report</a> in the Nikkei Asian Review tells us that a Chinese company founded in 2016 is about to become the country's first mass producer of locally designed memory chips, set to compete in DRAM with the likes of Samsung, SK Hynix and Micron. That company is Changxin Memory Technologies (CXMT), previously known by a plethora of other names including Innotron, Hefei Rui-Li and Hefei Chang Xin. The report quotes CXMT CEO Zhu Yiming as saying last month that CXMT's DRAM design was recently modified and is now based on technology from Qimonda, a descendant of German chipmaker Infineon that filed bankruptcy in 2009. Apparently, this was in an effort to avoid the fate of another aspiring Chinese DRAM manufacturer, Fujian Jinhua, which was indicted by the US authorities on charges of IP theft back in November 2019. On the surface, this sounds plausible and quite sensible. However, the reality is China's path to developing its own DRAM technology base is a tangled and convoluted web which does not bode well for its future success and leaves us resolutely bearish. Here's why.

Tensions created by the stalled US-China trade talks along with the recent US embargo on selling to Huawei has shone a spotlight once again on China's efforts to design and manufacture its own supplies of key electronic components, most notably DRAM and NAND. To that end, a recent report in the Nikkei Asian Review tells us that a Chinese company founded in 2016 is about to become the country's first mass producer of locally designed memory chips, set to compete in DRAM with the likes of Samsung, SK Hynix and Micron. That company is Changxin Memory Technologies (CXMT), previously known by a plethora of other names including Innotron, Hefei Rui-Li and Hefei Chang Xin. The report quotes CXMT CEO Zhu Yiming as saying last month that CXMT's DRAM design was recently modified and is now based on technology from Qimonda, a descendant of German chipmaker Infineon that filed bankruptcy in 2009. Apparently, this was in an effort to avoid the fate of another aspiring Chinese DRAM manufacturer, Fujian Jinhua, which was indicted by the US authorities on charges of IP theft back in November 2019. On the surface, this sounds plausible and quite sensible. However, the reality is China's path to developing its own DRAM technology base is a tangled and convoluted web which does not bode well for its future success and leaves us resolutely bearish. Here's why. 

China's DRAM Ambitions. As A Convoluted & Tangled Web Unfolds, We Remain Resolutely Bearish.

Hong Kong

Inspur International Limited, through its subsidiaries, distributes, sources, and resells IT (Information Technology) products in Hong Kong, China, and overseas markets.

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Inspur International (596 HK)

Hong Kong' Short Interest: From the Wuhan Lockdown, The Market Low, Until Now

Since August 2012, reportable net short positions in Hong Kong at the end of each week are filed with the SFC confidentially and are published one...

David Blennerhassett

China's DRAM Ambitions. As A Convoluted & Tangled Web Unfolds, We Remain Resolutely Bearish.

Tensions created by the stalled US-China trade talks along with the recent US embargo on selling to Huawei has shone a spotlight once again on...

William Keating

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