Alibaba Group Holding Ltd. is coming under increased pressure from US short sellers who have pushed bets against the e-commerce giant to the highest in more than 14 months on concern China’s deepest economic slowdown since 1990 will only get worse.
Short interest in China’s biggest online retailer surged to 7.5 percent of shares outstanding on Jan. 21, the highest since November 2014, according to data compiled by Markit and Bloomberg.
That is more than double from a Dec. 1 low.
Bearish bets on rival JD.com Inc.have hovered around 2 percent since last month.
Pessimists are once again taking aim at Alibaba — a bellwether for US investor sentiment on China — as mainland stocks entered a bear market last week, Bloomberg reports.
Those wagers are already starting to pay off as a sell-off since the start of the year sent the American depositary receipts of Alibaba down more than 13 percent.
Investors see Alibaba as a stock that reflects the state of the Chinese economy, said Henry Guo, a San Francisco-based analyst at Summit Research Partners LLC., who has a buy rating on the stock.
“With China’s economic outlook worsening, that’s just an easy way for people to have short China exposure.”
China’s top leadership has signaled it may accommodate more economic slackness as officials tackle delicate tasks such as reducing excess capacity.
The world’s second largest economy will slow to 6.5 percent this year and 6.3 percent next year, according to the median of economist estimates.
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