(Bloomberg) -- Short selling in Hong Kong stocks is the least active in three and a half years, after a series of Chinese stimulus measures drove a rally on the city’s bourse.

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Turnover in short positions fell to 9.7% of the market’s total Friday, marking the lowest level since April 2021, according to Bloomberg’s calculations based on exchange data. It recovered slightly to 10.7% Monday.

The weaker appetite in short selling comes as the benchmark Hang Seng Index has rebounded 20% from a September trough, following a broader Chinese stock rally triggered by Beijing’s stimulus blitz. The initial euphoria has since faded a bit, with investors awaiting stronger support steps such as ramped-up fiscal spending.

The risk-reward ratio for Hong Kong and mainland Chinese equities is now skewed toward the upside, said Billy Leung, an investment strategist at Global X ETFs. “That means the risk of shorts is higher now, and hence lower short selling positioning.”

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