𝐂𝐡𝐢𝐧𝐚 𝐧𝐞𝐞𝐝𝐬 𝐦𝐨𝐫𝐞 𝐬𝐡𝐨𝐫𝐭-𝐬𝐞𝐥𝐥𝐞𝐫𝐬, 𝐚𝐜𝐭𝐮𝐚𝐥𝐥𝐲.
- sinosenses
- Nov 8
- 2 min read
Short sellers get bad name, but they do useful jobs. They test stories, show weak facts, and force markets to value risk properly. In China, where retail investors are as many as "chives" as they are sometimes called, corporate ties can be complex, and disclosure sometimes thin, this kind of market check is not luxury - it is necessary.
Think #SinoForest in 2011 and #LuckinCoffee in 2020. Both cases began with skeptical reports that peeled back rosy narratives and revealed real problems, and both ended with big investor losses once those problems were exposed. More recently, the biotech flagship stock on #HKex just a few years ago #NewHorizonHealth shows the same pattern: short reports, questions about sales and controls, management shakeups, trading suspension, and delisting. These episodes are painful, but they show what happens when claims are left unchallenged.
What China needs is not more noise, but smarter, regulated shorting:
- Better access to reliable, timely financial data so market doubts can be checked quickly;
- Clearer whistleblower protections and stronger incentives for credible forensic work;
- Simple public rules on large short positions so markets can see significant bets against a company;
- Deeper and more transparent borrowing and derivatives markets so downside views can be expressed legally;
- Faster, consistent enforcement of insider‑trading, related‑party, and disclosure rules so bad governance has real consequences.
Why now? China’s markets are bigger and more linked globally than before. Structures like #VIEs and common‑control webs, plus uneven disclosure, make price discovery fragile. If skepticism is discouraged, valuation bubbles and governance blind spots grow, and the eventual correction hurts ordinary savers and long‑term investors much more than disciplined shorting would.
This is not a call to welcome predatory or politically driven attacks. 𝗜𝘁 𝗶𝘀 𝗮 𝗰𝗮𝗹𝗹 𝘁𝗼 𝗯𝘂𝗶𝗹𝗱 𝘁𝗵𝗲 𝗶𝗻𝘀𝘁𝗶𝘁𝘂𝘁𝗶𝗼𝗻𝘀 𝘁𝗵𝗮𝘁 𝗺𝗮𝗸𝗲 𝘀𝗵𝗼𝗿𝘁𝗶𝗻𝗴 𝗿𝗲𝘀𝗽𝗼𝗻𝘀𝗶𝗯𝗹𝗲: 𝗯𝗲𝘁𝘁𝗲𝗿 𝗱𝗮𝘁𝗮, 𝗰𝗹𝗲𝗮𝗿𝗲𝗿 𝗿𝗲𝗽𝗼𝗿𝘁𝗶𝗻𝗴 𝗿𝘂𝗹𝗲𝘀, 𝗹𝗲𝗴𝗮𝗹 𝗽𝗿𝗼𝘁𝗲𝗰𝘁𝗶𝗼𝗻𝘀 𝗳𝗼𝗿 𝗴𝗼𝗼𝗱‑𝗳𝗮𝗶𝘁𝗵 𝘀𝗰𝗲𝗽𝘁𝗶𝗰𝘀, 𝗮𝗻𝗱 𝘀𝘁𝗲𝗮𝗱𝘆 𝗲𝗻𝗳𝗼𝗿𝗰𝗲𝗺𝗲𝗻𝘁.
𝗜𝗳 𝗿𝗲𝗴𝘂𝗹𝗮𝘁𝗼𝗿𝘀 𝘄𝗮𝗻𝘁 𝗵𝗲𝗮𝗹𝘁𝗵𝗶𝗲𝗿 𝗺𝗮𝗿𝗸𝗲𝘁𝘀, 𝘁𝗵𝗲𝘀𝗲 𝗮𝗿𝗲 𝘁𝗵𝗲 𝗹𝗲𝘃𝗲𝗿𝘀 𝘁𝗼 𝗽𝘂𝗹𝗹.
Takeaways (Questions) - Which one should be the priority in Hong Kong and Mainland practice - faster public disclosures, or stronger whistleblower channels? Thoughts?
For Simplified Chinese version of this article 本文简体中文版全文：【市場快評】中国股市其实需要更多做空者 - Click here: https://lnkd.in/gXau_hMP
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