FXI — the iShares China Large-Cap ETF — enters the week in a notably different borrow environment than the one that prompted last week's record-short alert, with availability staging a sharp recovery even as short interest remains at historically elevated levels.
The clearest change is in the lending pool. A week ago, availability had collapsed to single digits — barely one share available for every ten already borrowed. That squeeze has partially unwound. Availability recovered to 70.3% on June 2, up from just 4.3% on June 1 and a multi-week floor of around 5%. That is a dramatic reversal in a single session. The 52-week low for availability reached 2.3%, so the pool is no longer at crisis tightness — but this recovery follows an extended period where borrow was effectively locked. Cost to borrow tells a consistent story: it doubled from roughly 0.50% in late April to a peak near 1.27% in late May, and has since eased slightly to 1.19%. The absolute level remains low by squeeze standards, but the velocity of the move — more than 100% in a single week — was the real signal.
Short interest itself remains extreme. At 35% of free float as of June 2, it is well above the 24–25% range seen a month ago and represents a roughly 40% build over 30 days. The near-term trajectory has moderated slightly — shares short fell about 6% on June 2 after peaking above 62 million on June 1 — but the one-week change is still +28%. This is not a position that is being unwound. Shorts built aggressively through late May and are now consolidating near the top. The ORTEX short score of 67.6 reflects that persistent bearish lean, little changed from the 67–69 range of the past two weeks.
Options positioning has shifted away from the defensive extreme seen in late April and early May. The put/call ratio ran above 1.10 throughout April and into early May — a period of heavy downside hedging. It has since compressed to 0.90, just below its 20-day average of 0.93 and a z-score close to zero. That is a meaningful rotation: options traders who were paying up for puts have largely stepped back. Whether that reflects reduced concern about further downside or simply exhaustion of the hedging trade after a strong two-week position-build is an open question. The 52-week PCR range spans 0.71 to 1.43, so the current reading sits in the middle — neither a conviction buy signal nor a panic hedge.
The institutional holder base adds an interesting layer. The last reported quarter showed sharp divergence. Morgan Stanley cut its position by 4.7 million shares, the largest reduction among top holders. UBS trimmed by 9.2 million — the single biggest reduction in the table. At the same time, Citigroup added 6.3 million shares, Goldman Sachs added 2.9 million, and Brevan Howard entered as a new holder with 6 million shares. Old Mission Capital — a market-making firm — added 5.4 million. That pattern is consistent with a market bifurcating between macro bears (cutting exposure) and tactical players (adding). Brevan Howard's fresh entry is notable: the macro hedge fund does not typically hold ETF positions passively.
The prior week's article flagged a borrow market running dry and short interest at a then-record 35.7%. Both remain broadly true. What has changed is the pace: the borrow pool has breathed, short interest has consolidated rather than accelerated, and options traders have rotated away from peak defensiveness. The setup to watch is whether availability tightens again — the move from 70% back toward single digits over just a few sessions last week showed how quickly the pool can drain — and whether the institutional divergence between macro sellers and tactical buyers resolves in either direction.
See the live data behind this article on ORTEX.
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