Tencent Short Selling Shares Plunge 60% in Recent Three Days, Southbound Funds "Sweep Up" Against the Trend and May Establish Short-Term Bottom

Caixin March 24 News (Editor: Hu Jiarong)
In late March 2026, after a period of intense volatility, the Hong Kong tech sector experienced a mood recovery. Short selling data for Tencent Holdings, Alibaba, and Xiaomi Group, which had surged explosively in mid-month, showed a significant decline on March 23. Meanwhile, southbound funds flowed into the market against the trend, and the Hang Seng Tech Index saw a slight rebound today.

Tech Giants’ Short Selling Volumes Cool Down Simultaneously

Tencent’s Short Selling Pressure Significantly Eases, Down Over 60%

Tencent’s short data changed most dramatically, indicating a rapid withdrawal of bearish positions.

Shares change: from a peak of 8.2963 million shares on March 19 to 3.239 million shares on March 23, a decrease of 60.95%.

Value change: from HKD 4.356 billion to HKD 1.622 billion, a drop of 62.76%.

Notably, in the previous week, due to concerns over capital expenditure after earnings reports, Tencent’s short shares surged from 2.4538 million on March 17 to 8.3963 million on March 20, an increase of over 240%. The quick decline this time suggests that market panic selling after Tencent’s “good news” has been fully released.

Alibaba’s Short Selling Slightly Declines, Market Debate Continues

Alibaba’s short data shows a downward trend, but the absolute scale remains high, indicating ongoing market disagreement.

Shares change: from 29.6607 million on March 18 to 24.8744 million on March 23, a decrease of about 16.13%.

Value change: short selling value from HKD 4.109 billion to HKD 2.972 billion, a decline of 27.67%.

Earlier, Alibaba released its earnings report, which temporarily pressured the stock to a low of HKD 123.70. Although short positions have decreased, the nearly HKD 3 billion in short selling still shows some bears are waiting for clearer signs of recovery or remain cautious about its cloud business and e-commerce competition landscape.

Xiaomi Group’s Short Data Declines Ahead of Earnings Release

Ahead of its upcoming annual report, Xiaomi’s short data shows a clear decline.

Shares change: from a high of 124.893 million on March 20 to 92.327 million on March 23, a drop of about 26.08%.

Value change: short selling value from HKD 4.249 billion to HKD 2.972 billion, a decrease of 30.05%.

Market expects Xiaomi to announce earnings after market close on March 24. The decline in short positions may indicate some bears are taking profits before the earnings release to avoid short squeeze risks if results beat expectations.

Southbound Funds Contrarily “Buy Up” to Hedge Short Pressure

Contrasting with the volatility in short selling, southbound funds have shown strong bullish intent recently.

Data shows that on March 20 alone, southbound funds net bought HKD 2.459 billion of Xiaomi, HKD 2.037 billion of Alibaba, and HKD 679 million of Tencent.

Analysts suggest this “short sellers retreat, longs enter” divergence often signals a short-term bottom. Mainland capital is using the Hong Kong market’s panic to position on the left side, believing that valuations of tech giants are now highly attractive.

Previously, the correction in Hong Kong’s tech sector was attributed to “quadruple pressures”: global liquidity, industry cycle, capital preferences, and profit expectations. However, with Tencent and Alibaba’s earnings reports released, the “bad news is exhausted” effect is emerging. Market focus is shifting from pure earnings concerns to expectations around AI implementation, buyback efforts, and the Federal Reserve’s monetary policy shift.