Brazil ETF Shorts Double Down Into a 15% Rally

EWZ short sellers are pressing hard against a rising tide. The iShares MSCI Brazil ETF has gained 15% in one week. Short interest has risen 25% over the same period to 35.2% of free float.

The Bear Case Gets More Expensive

Short interest stood at roughly 28% of float a week ago. It now sits at 35.2%, a 64% jump over the past month. Borrowing that conviction is getting costlier. The cost to borrow has risen 178% in one week to 1.37%. A month ago it was below 0.59%.

Availability in the lending pool has tightened sharply alongside that demand. Availability has dropped to 17.8%, meaning roughly one share remains available to borrow for every five already out on loan. A month ago, availability was above 150%. That collapse in lending supply, combined with surging short demand, explains the borrow cost spike.

Options Market Hedges Against a Rebound

The put-call ratio hit 0.44 on 8 October, 2.9 standard deviations above its 20-day average of 0.31. That is the highest reading in recent weeks. Options traders are paying up for downside protection even as the ETF rallies.

The contrast is striking: the ETF has gained 12.5% over the past month and 15% in the past week alone, yet short positioning has accelerated rather than retreated.

Institutional Flows Tell a Different Story

The most recent 13F filings, as of 30 June 2026, show several large institutions adding exposure. Goldman Sachs added 12.7 million shares in the quarter. Morgan Stanley held 28.3 million shares, up 7.9 million. Schonfeld Strategic Advisors and D.E. Shaw each built new positions from zero.

Those buys pre-date the current rally. They also pre-date the sharp jump in short interest seen since late September. It is possible the same institutions are now using listed shorts or derivatives to hedge those positions, which would partly explain both the high SI and the active lending market.

What to Watch

The ORTEX short score sits at 69.7, near the top of its recent range. With availability at 17.8% and cost to borrow still rising, bears face a real friction cost if the ETF extends its gains. The 52-week low for availability was 1.04%, recorded on 7 October, suggesting the borrow market has been even tighter very recently.

• SI % of free float: 35.2% (up 25% week-on-week, up 64% month-on-month)
• Cost to borrow: 1.37% (up 178% week-on-week)
• Availability: 17.8% (down 79% week-on-week)
• Put-call ratio: 0.44, z-score 2.9 vs 20-day average of 0.31
• EWZ price: $42.59, up 15% in one week
• Short score: 69.7 as of 7 October 2026