The borrow stress that gripped FXI through late May has unwound decisively. Three signals are now pointing the same way — and none of them favour the bears.
Short interest has fallen 22.3% in a single week. It sits at 27.1% of free float as of June 11, down from a peak above 39% in early June. That is still an elevated absolute level. But the direction is unambiguous: shorts are covering, and they are doing it fast.
One week ago, this article noted availability had staged a sharp intraday recovery from crisis lows. That recovery has continued. Availability now stands at 78.9% — roughly one share available for every 1.3 already borrowed. Compare that to June 1, when availability was at 4.3% and every share in the lending pool was effectively spoken for. The squeeze-like conditions that characterised late May have dissolved.
The clearest single-session signal came in the cost to borrow. It dropped 72% in one week to 0.30%. Through most of May and into early June, CTB hovered between 1.06% and 1.27%. On June 11, it fell to just under 0.30% — a level not seen since before the borrow stress began. That kind of collapse suggests a sudden and large return of shares to the lending pool, consistent with bulk short covering rather than a gradual unwind.
The options market is moving in the same direction. The put-call ratio has dropped to 0.85 — a three-week low and a z-score of -2.18 relative to the 20-day mean of 0.89. That is statistically notable. The 52-week high for the PCR was 1.43. It stood above 1.10 as recently as early May. Options positioning has rotated sharply away from protective puts and toward a more neutral-to-constructive stance on Chinese large-cap exposure.
The ORTEX short score has also drifted lower, from 68.9 on June 1 to 65.6 on June 10 — a modest but consistent move in the same direction as the covering activity.
Among the top holders, the most notable recent move is Brevan Howard entering with 6.03 million shares reported as of March 31 — a new position. Citigroup added 6.3 million shares in the same period. UBS Asset Management trimmed by 9.2 million shares. Morgan Stanley reduced by 4.7 million. The institutional picture is mixed, but the smart-money additions are from names associated with macro positioning rather than passive holding.
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