EWY has become one of the most electrifying trades in the ETF universe this week — a 17% gain in five sessions combined with a simultaneous explosion in short interest creates the kind of tension that demands attention.
The price move is extraordinary. EWY closed at $190.20 on Friday, up 17.4% on the week and nearly 50% over the past month. That is a macro repricing, not a drift — South Korean assets have caught a serious bid. Yet running directly against that rally, short interest has climbed almost in lockstep. Estimated short shares hit 21.5 million by May 7, a 15.9% rise on the week and a 48.8% jump over the past month. At 28.3% of the float, the short book against this ETF is substantial. The market is genuinely split: a large and growing cohort is betting the rally either reverses or is being used to hedge long Korea exposure elsewhere.
The lending market has tightened sharply and very recently. Availability has collapsed to 14.9% of estimated short interest — meaning there are fewer than fifteen shares available to borrow for every hundred already shorted. That is an extremely thin cushion. What makes this more striking is the speed: as recently as May 5, availability sat at comfortable levels, but by May 7 the borrow pool had effectively dried up. The cost to borrow has responded, jumping 22% on the week to 1.05% annualised — still modest in absolute terms, but the direction of travel is clear. Any further demand for shorts will find a much tighter market than existed even five days ago. The ORTEX short score has climbed to 66.5 and is at its highest level of the past ten days, reflecting the mounting pressure.
Options positioning adds another layer of caution. The put/call ratio has risen to 1.02, more than two standard deviations above its 20-day average of 0.84 — the most defensively skewed reading in months, albeit well below the 52-week high of 2.76. Traders who have ridden the rally are paying meaningfully more for downside protection now than they were two weeks ago. That is not panic, but it is a hedge. The jump in the PCR from 0.82 on May 4 to 1.02 by Friday tracks almost exactly with the final leg of the price surge, suggesting that each incremental gain has been met with incremental hedging.
The institutional picture is worth noting. Rafferty Asset Management — a firm best known for running leveraged and inverse ETFs — reported a position of 1.22 million shares as of April 30, built from scratch over the period. That is a significant and recent build. On the other side, Appaloosa Management entered a fresh 1.875 million share position as of end-December. Bank of America and Morgan Stanley both added meaningfully in the same period. The ownership base is therefore a mix of hedge funds leaning into the trade and financial institutions managing broader exposure — not the profile of a lightly owned, momentum-only story.
The ETF did log an 11.2% single-day move on May 5, which the data flags as an event. Prior reaction history is sparse and mixed: a 2.3% drop after a November 2025 event, flat over five days; a 0.65% dip in November 2024 with a notable 8.6% five-day decline to follow. None of those are directly comparable to the current macro backdrop, but the five-day drift after the November 2024 event is a data point worth holding in memory.
The key tension to watch is whether the short book — now at a near-record 28% of float and squeezed into an increasingly thin borrow pool — continues to rebuild as prices hold, or whether a sudden borrow squeeze forces covering that amplifies the rally further.
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