Three days ago, bears were piling in. Now they're pulling back. EWY, the iShares MSCI South Korea ETF, is showing its first meaningful signs of short covering — yet the lending market remains as tight as ever.
Short interest has dropped 8.1% over the past week to 20.3% of free float. That reverses the trajectory from our last report, when shorts had just peaked at roughly 21.2 million shares on May 8. Shares outstanding short now stand at 15.4 million. The covering has coincided with a sharp price rebound — EWY gained 3.5% on Thursday alone and is up 24% over the past month.
This is a meaningful shift from the picture on May 19. Bears are closing positions, not adding them.
Despite the covering, availability remains extremely tight. It stood at just 16.8% on Thursday — roughly one share still available for every six already lent out. That is well below the 104% reading seen as recently as May 6. The borrow pool has not recovered even as short interest falls.
The cost to borrow has, however, crashed. CTB dropped 64% in a week to just 0.48%. That is a sharp reversal from the 1.35% level seen on May 15. Cheaper borrow usually follows when shorts return shares — supply loosens slightly even if availability stays historically tight.
The put-call ratio has pulled back from its recent extreme of 2.02 on May 19. It now sits at 1.87 — still well above the 20-day mean of 1.17. The z-score stands at 1.55, down from nearly 3.0 earlier this week. Options traders are less aggressively bearish than they were, but the PCR remains elevated versus recent history.
The 52-week PCR high is 2.76. The current reading is not near that peak.
New Q1 filings show several large holders built significant positions. Bank of America added 5.1 million shares as of March 31. UBS Asset Management added 5.2 million. BNP Paribas added 5.5 million. Rafferty Asset Management added 3.3 million shares as of April 30. These are substantial builds — likely tied to hedging or structured product activity rather than directional bets.
The ORTEX short score sits at 64.7, down modestly from 66.5 a week ago. That decline aligns with the short covering trend.
What to watch: Whether availability recovers toward normal levels as covering continues — or whether it stays locked below 20%, signalling that fresh short demand is absorbing every share returned.
See the live data behind this article on ORTEX.
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