136 — China Ruyi Holdings — heads into September with its lending market even tighter than it was when this column last filed, the stock now down 16% on the week and the borrow squeeze entering a new phase.
The dominant shift since last week's note is directional, not structural. Cost to borrow touched 105% on August 26 — the peak flagged in the prior article — and has since collapsed back to 23%. That sounds like relief, but it isn't. Availability has moved in the opposite direction: it has tightened sharply, falling from roughly 21% a week ago to just 8% now. That means only one share remains available to lend for every twelve already borrowed, the closest the lending pool has come to fully used in the past twelve months. The 52-week low for availability is 7.5%, and the current reading is almost there. What happened to borrow cost is that shorts covered positions — short interest fell nearly 5% on the week — reducing the frantic demand for scarce supply. But the pool itself has also shrunk. The net result: the borrow market is tighter in structural terms even as the headline cost has eased.
The ORTEX short score tells the same story from a different angle. It peaked at 96.8 on August 27 and has eased marginally to 95.2 — still in the top 5% of the universe for short-side stress. The factor scores reinforce this: days-to-cover ranks in the fifth percentile, and availability ranks equally extreme. These are not numbers that suggest bears are backing away; they suggest the existing short position is deeply embedded and expensive to maintain. With nearly 2 billion shares short and the official FINRA fortnightly count at 1.998 billion shares — 19 days to cover — any acceleration in selling by longs could sharpen the squeeze dynamic quickly.
The price action adds context to the structural pressure. China Ruyi fell 7.8% on September 1 alone, extending a month-long decline of nearly 14% to close at HK$1.24. Crucially, peers on the mainland exchanges moved in the opposite direction: correlated names on the SHSE and SZSE posted weekly gains of 3% to 13%, while the SEHK-listed peer 1060 also fell roughly 5% on the week. That divergence isolates Ruyi's weakness rather than explaining it through a sector-wide move. The earnings history is worth noting: the last reported result on August 28 triggered a 6.6% one-day decline, and the May result produced a 2.7% drop followed by an 8.1% five-day fall. The stock has a habit of selling off into and out of results.
On the ownership side, institutional flow has been mixed but not alarming. BlackRock added 20 million shares as of mid-August — a modest incremental buy into the weakness. JPMorgan trimmed substantially, cutting its position by 100 million shares as of July 20. The largest anchor holders — Liming Ke at 15.9% and Tencent at 15.6% — reported no change at end-2025. The analyst consensus carries a buy rating with a mean target of HK$2.90, implying significant upside from current levels, but that data is nearly 100 days old and should be treated with caution given how much the stock has moved since.
What to watch next is whether availability continues to tighten toward that 7.5% floor: a fresh breach of that level, combined with any positive price catalyst, would be the precise configuration in which covering pressure becomes self-reinforcing.
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