The ‘Big Short’ on China became the ‘Big Squeeze’ that caught Wall Street on the back foot

Oct. 2, 2024 - South China Morning Post

Wall Street is scrambling to catch up after Beijing’s surprise stimulus onslaught set off a bull run on the Hong Kong and mainland China stock markets, catching short-sellers off guard. UBS, meanwhile, bumped its year-end target for the benchmark Hang Seng Index up by 7 per cent to 22,100.

Japan’s biggest brokerage Nomura similarly raised its year-end target for the MSCI China Index to 65 from 59 on the back of the measures from China and the Fed’s unexpected jumbo rate cut on September 18. AdvertisementThe conviction to short China amid a deflating economy has caused a “massive squeeze” amid the unexpected stimulus-induced rally, Hartnett said in a note to clients over the weekend.

“Market expectations have been rectified decisively, and investor confidence restored significantly” by the recent strong policy signals, said Thomas Fang, head of China global markets at UBS...