Hong Kong Tech Stocks Show Divergence in Short Selling: Tencent Short Sellers "Retreat" Over 70%, Xiaomi Remains Deadlocked

Financial Associated Press, March 17 (Editor: Hu Jiarong) — Since March 2026, the Hong Kong stock market has experienced a deep correction followed by a rebound. On March 6, the Hang Seng Index closed up strongly by 1.72%, with the Hang Seng Tech Index performing even better, soaring by 3.15% in a single day, with intraday gains reaching as high as 3.77%.

Since then, market sentiment has continued to recover. On March 16, the Hang Seng Tech Index rose another 2.69%, maintaining the recent rebound momentum.

In this rally, capital inflows and a rebound in risk appetite have been the main driving forces. Since February, southbound funds have accumulated a net inflow of HKD 90.575 billion, with Hong Kong tech ETFs experiencing a weekly net inflow of HKD 13.259 billion. Some Hang Seng Tech ETF products have seen their shares increase about sixfold in four months. However, amid the overall market recovery, short selling data for leading tech stocks has shown a divergent trend.

According to data disclosed by the Hong Kong Stock Exchange, the short positions in core tech stocks such as Tencent Holdings, Xiaomi Group, Alibaba, and Meituan have declined to varying degrees in mid-March, but the extent and pace of the declines differ significantly.

Tencent’s short volume dropped sharply from 8.7792 million shares on March 11 to 2.4538 million shares on March 17, a decrease of over 70%. Meanwhile, the short selling value fell from HKD 4.948 billion to HKD 1.369 billion, a decline of 72.33%.

Meituan’s short volume decreased significantly from 23.1936 million shares on March 9 to 11.5702 million shares on March 17, a 50.11% drop, with a temporary low of 6.5736 million shares. The short selling amount declined from HKD 1.797 billion to HKD 936 million, a 47.91% decrease, with a low of HKD 503 million during the period.

Xiaomi Group’s short volume, although also declining, remains relatively high. It decreased from 58.2758 million shares on March 9 to 50.2268 million shares on March 17, a 13.81% reduction. Notably, the short volume once dropped to a low of 22.689 million shares.

In terms of short selling amount, Xiaomi’s short positions fell from HKD 1.935 billion to HKD 1.801 billion, a 6.93% decrease, with a low of HKD 754 million during the period. Overall, while Xiaomi’s short pressure has eased, it remains more resilient compared to Tencent.

Alibaba’s short volume decreased from 18.1508 million shares on March 10 to 15.8902 million shares on March 17, a 12.45% decline, with a temporary low of 9.8805 million shares. The short selling amount fell from HKD 2.407 billion to HKD 2.173 billion, a 9.72% decrease, with a low of HKD 1.322 billion.

Market Logic Behind Diverging Short Selling Data

Tencent Leads Decline in Shorts: Valuation Repair Expectations Strengthen

The significant decline in Tencent’s short positions reflects growing market expectations for its valuation recovery. Fundamentally, Tencent, as a leading Hong Kong tech stock, demonstrated resilience in its gaming, advertising, and fintech segments in the first quarter of 2026. Coupled with sustained inflows from southbound funds, it is reasonable for short sellers to exit at this point.

Additionally, the short selling amount for Tencent rapidly decreased from nearly HKD 5 billion to around HKD 1.3 billion, indicating that accumulated short positions are being closed out. Such concentrated short covering often triggers short-term stock price rebounds.

Xiaomi’s Resilience in Short Positions: Valuation Battles Continue

Xiaomi’s short data shows limited decline, indicating ongoing market disagreement over its valuation. This stems mainly from two factors: a need to correct perceived short-term valuation bubbles and uncertainties related to its automotive business investments. Although short positions have decreased, they have not been fully unwound, suggesting that market debates over Xiaomi’s valuation are still ongoing.

Why Is Short Selling Data So Market-Influential?

Short data is an important indicator of market sentiment. A rapid decline in short positions usually signals weakening bearish forces and easing pessimism. The sharp reduction in short positions for Tencent and Meituan can be seen as positive signs of market sentiment warming.

Strategy During the Consolidation Phase

Based on the current market environment and changes in short selling data, institutions suggest that the Hang Seng Tech Index is likely to experience a consolidation and mild recovery. The core support lies in the fact that current valuations are at historically low levels, highlighting attractive valuation opportunities. The main obstacles include the delayed pace of Federal Reserve rate cuts and the divergence in earnings recovery among constituent stocks.