Investors eye shorting China funds

Investors who won big during China’s stock market rise are looking to cash in on its possible decline, the Wall Street Journal said. Short selling of actual stock isn’t allowed in China, so fund investors have decided to bet against the market by selling fund shares short. The prices of several closed-end funds that invest in China are now trading far below the value of the fund’s holdings, possibly hinting at a negative outlook for asset values, the Journal reported. Morgan Stanley’s $604 million China A-Share fund is already seeing short-selling pressure: Unsettled short positions gained 42.6% to 482,551 shares by the middle of last month, making up 3.7% of the total shares outstanding, the Journal said.