A new scheme allowing global investors to short sell mainland Chinese stocks through Hong Kong failed to attract a single order on its first day of operation, highlighting the flaws in the programme.
The new short-selling facility, announced by bourse operator Hong Kong Exchanges & Clearing a week ago, enables foreigners to take direct bearish bets on individual Chinese stocks for the first time through the three-month-old equity trading link with Shanghai.
However, analysts have been quick to focus on the shortcomings of the scheme. Under the rules, a maximum of 1 per cent of the available shares can be sold short by foreign investors per day, up to a total of 5 per cent over 10 days — restrictions that some say defeat the point of allowing shorting altogether.