Tencent's short-selling shares have plummeted by nearly 60% over the past three days, while southbound funds are buying against the trend, potentially establishing a short-term bottom.

Securities Daily, March 24 (Editor: Hu Jiarong) — In late March 2026, after experiencing intense volatility, the Hong Kong tech sector saw a recovery in sentiment. Short selling data for Tencent Holdings, Alibaba, and Xiaomi Group, which had surged explosively in mid-month, showed a significant decline on March 23. Meanwhile, southbound funds flowed in sharply against the trend, and the Hang Seng Tech Index edged higher today.

Tech Giants’ Short Selling Volume Eases Simultaneously

Tencent’s Short Selling Pressure Significantly Relieved, Down Over 60%

Tencent’s short data changed most dramatically, indicating a rapid retreat of bearish positions.

Shares Change: From a peak of 8.2963 million shares on March 19 to 3.239 million shares on March 23, a decrease of 60.95%.

Value Change: From HKD 4.356 billion to HKD 1.622 billion, a drop of 62.76%.

Notably, in the previous week, driven by concerns over capital expenditure after earnings reports, Tencent’s short shares surged from 2.4538 million on March 17 to 8.3963 million on March 20, an increase of over 240%. The rapid decline this time indicates that market panic selling after Tencent’s “positive news” has been fully released.

Alibaba’s Short Selling Moderates, Market Debate Continues

Alibaba’s short data shows a downward trend, but the absolute scale remains high, reflecting ongoing market disagreement.

Shares Change: From 29.6607 million on March 18 to 24.8744 million on March 23, a decrease of about 16.13%.

Value Change: Short selling value dropped from HKD 4.109 billion to HKD 2.972 billion, a decline of 27.67%.

Earlier, Alibaba released its earnings report, which temporarily pressured the stock to a low of HKD 123.70. Despite the decline in short positions, nearly HKD 3 billion in short selling indicates some bears are waiting for clearer signs of recovery or remain cautious about its cloud business and e-commerce competition landscape.

Xiaomi Group’s Short Data Declines Ahead of Earnings Release

As Xiaomi prepares to release its annual report, short selling data has noticeably decreased.

Shares Change: From a high of 124.893 million on March 20 to 92.327 million on March 23, a decline of about 26.08%.

Value Change: Short selling value fell from HKD 4.249 billion to HKD 2.972 billion, a drop of 30.05%.

Market expectations suggest Xiaomi will announce its earnings after market close on March 24. The decline in short positions may indicate some bears are taking profits before the earnings release to avoid short squeeze risks from potentially better-than-expected results.

Southbound Funds Contrarily “Buy Up” to Hedge Short Pressure

Contrasting sharply with the volatility in short selling, southbound funds have shown strong bullish intent recently.

According to data, on March 20 alone, southbound funds net bought HKD 2.459 billion of Xiaomi, HKD 2.037 billion of Alibaba, and HKD 679 million of Tencent.

Analysts point out that this “short covering and long entry” divergence often signals the establishment of a short-term bottom. Mainland capital is leveraging the panic sentiment in the Hong Kong market to position on the left side, believing that the valuations of tech giants are now highly attractive.

Previously, the correction in the Hong Kong tech sector was attributed to “quadruple pressures”: global liquidity, industry cycle, capital preferences, and profit expectations. However, as Tencent and Alibaba’s earnings reports are released, the “bad news is fully priced in” effect is emerging. Market focus is shifting from pure earnings concerns to expectations around AI technology implementation, share buybacks, and the Federal Reserve’s monetary policy outlook.