Hong Kong becomes Asia's biggest short-selling market

13 October 2010

Hong Kong has become Asia's largest market for short selling, overtaking Japan as a result of increased demand for Chinese securities.

According to a report from Data Explorers, banks, mutual funds and pensions made $245 million from loaning out Hong Kong shares in the past 12 months, in comparison with $241 million in Japan.

Emil Wolter, head of Asian regional strategy at the Royal Bank of Scotland, told Bloomberg: "As the Hong Kong market grows, there's an increasing amount of activity that is not necessarily directional, like arbitrage, program trading and more complex trading strategies that are being put to work."

He added that investors are growing increasingly "frustrated" with the Japanese market, which has been fading for a considerable period of time.

Last week, Carlo Grigioni, vice-chairman of wealth management in Singapore for UBS, explained that the incredible number of fortunes being made in Asia in the past two decades is making the region a high strategic priority for his company.

By Asim Shah

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