EWW has added another week of gains while the short-selling pressure against it has only deepened — a divergence that is now sharper than at any point in the past month.
Short interest has continued its climb since the previous note flagged the initial buildup. It has reached 8.86% of the free float, up from roughly 7.1% a week ago — a further 24% jump in five sessions. For context, that level was barely 5% of the float in early May. The pace of accumulation is deliberate: shorts added roughly 840,000 shares over the past month, pushing the ORTEX short score to 64.4 out of 100. That is the highest reading of the past ten trading sessions and reflects a positioning profile that has moved decisively into elevated territory for an ETF of this size.
The borrow market tells a progressively tighter story. Availability has compressed from roughly 75% when the last note was published to 33% now — meaning only one share is available for every three currently borrowed. The 52-week low for availability has touched 17%, so there is room for further tightening from here. Borrowing costs have risen in tandem, up 43% over the week and 53% over the past month to an annualised rate of around 2.14%. That is not yet extreme in absolute terms, but the direction of travel is unambiguous: the lending pool is draining as new short demand continues to absorb what remains.
The macro backdrop sustaining this positioning has not shifted. USMCA renegotiation pressure remains live, with tighter rules of origin and US content requirements still on the table. The ETF's bull case rests on Mexico's nearshoring story — supply chain diversification away from Asia continues to attract manufacturing investment — and the peso has been supportive of dollar-based returns. But the short-side bet is not against Mexico's fundamentals directly; it is a hedge against the tariff-and-trade-deal risk that sits directly in front of that structural thesis. The two positions coexist because the timeline of the nearshoring payoff (multi-year) is very different from the timeline of USMCA disruption (months).
Options positioning is quietly supportive of the short case. The put/call ratio has been running near 1.31, broadly in line with its 20-day average and well above the midpoint of its 52-week range — the low end of that range, back in April, touched 0.11. So while options traders are not in a fresh panic (the PCR z-score is flat), the overall bias toward puts relative to calls has been a consistent feature of the past several weeks. The defensive lean has not spiked further this week, but it has not unwound either.
Institutional holders as of March-end include Morgan Stanley (4.3% of shares, up 274,000 shares from the prior quarter) and JPMorgan (3.7%, also adding shares), alongside UBS, which trimmed its position by roughly 324,000 shares in Q1. BTG Pactual's Brazilian asset management arm initiated a position of 511,000 shares — the largest new entrant in the quarter. The ownership mix spans global asset managers, pension capital, and trading desks, reflecting the ETF's dual role as both a tactical vehicle and a structural Mexico allocation.
What to watch next: the pace at which availability continues to compress is the key variable — if it breaks through 20% toward the 52-week low, the cost-to-borrow dynamic will likely accelerate, and the tension between a grinding price rally and a still-building short position will become harder to maintain.
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