EWW — the iShares MSCI Mexico ETF — enters this week holding near multi-month highs even as short sellers have sharply increased their bets against it, creating one of the more interesting divergences in the EM space right now.
Short interest has climbed fast and hard. It jumped roughly 21% in a single week and is up nearly 21% over the past month, now running at 7.1% of the free float. That is a meaningful level for an ETF, reflecting deliberate hedging rather than incidental positioning. The catalyst is not hard to find. US Trade Representative Greer explicitly said this week that the US intends to keep tariffs on Mexican goods as long as the trade deficit persists, and that USMCA renegotiations will focus on tightening rules of origin and boosting US content requirements. A fresh round of bilateral USMCA talks was announced on May 27, pushing this risk firmly into the near-term window.
The borrow market tells the same story. Availability has tightened sharply — from a loose 450% in early May all the way down to 75% now, meaning less than one share is available for every dollar already borrowed. That is still within normal range, but the pace of compression is the standout: availability collapsed by more than 40% in a single week. Cost to borrow has risen in lockstep, climbing roughly 18% over the same period to 1.5%. Neither figure yet signals an imminent squeeze, but the direction of travel is unambiguous. The ORTEX short score has also risen steadily, from around 52 three weeks ago to 59.5 today — marking its highest level of this recent run.
Options positioning is actually running less defensive than usual, which sets up a genuine contrast with the short interest story. The put/call ratio is 1.23, modestly below its 20-day mean of 1.37, and about 0.9 standard deviations below that average — a near-term softening in hedging demand even as the fundamental trade risk escalates. Earlier in May and in late April, the PCR was routinely above 1.4 and touched 2.09 on April 27. The recent drift lower suggests some options hedgers have rotated or stepped back just as fresh macro pressure landed.
Institutional ownership adds an interesting layer. Morgan Stanley added 274,000 shares in the quarter ended March 31. LPL Financial added 79,000. UBS trimmed by 324,000 — a notable reduction at roughly 30% of its prior holding. Brazilian asset manager BTG Pactual built a fresh position of 511,000 shares from zero, the largest new entry among top holders. The Latin American institutional interest is noteworthy given the USMCA backdrop; it may reflect a nearshoring hedge or a different read on Mexico's trajectory than US-based hedgers.
The ETF itself has not broken. EWW trades at $78.86, up 1.7% on the week and nearly flat on the month. The price action appears resilient given the macro headwinds, and previous price events linked to USMCA-related announcements — the May 5 event that triggered a 5.1% one-day move and a 5.7% five-day run — show the fund can move sharply on trade headlines in either direction.
The key tension to watch is whether the USMCA negotiating rounds now formally scheduled lead to any concrete tariff adjustments. Short interest has been building for two consecutive weeks through trade uncertainty, yet the fund has not cracked. How that dynamic resolves will define the near-term direction for EWW.
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