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Here’s Why the China HGS Real Estate (HGSH) Stock Gapped 28% Higher Premarket

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Updated 7 Jan 2022

Key points:

  • China Hgs, Real Estate stock gapped 28% higher on positive investor sentiment.
  • Today’s move was driven by retail investors looking for a short squeeze.
  • It appears that the problems facing Evergrande are not spilling over to other firms.

The China Hgs Real Estate Inc (NASDAQ: HGSH) stock price gapped 28% higher despite the company not making any announcements today.

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The move was driven by positive investor sentiment, which is great for the Chinese real estate investment firm, given what is going on with Evergrande.

Today’s move was driven by retail investors looking for a short squeeze after short interest in the company surged in December 2021 after Evergrande’s troubles were made highly public.

Publicly available data indicates that short interest in the Chinese real estate firm surged 282.2% to reach 109,300 shares by December 15th compared to 28,600 shares on November 30th.

However, share transactions indicate that large institutional investors such as Citadel Advisors and Virtu Financial LLC bought extra shares in the real estate company.

Over 5 million shares of China Hgs Real Estate Holding had changed hands at writing, and the stock was up 28%.

Many investors have been spooked by the troubles facing the heavily-indebted China Evergrande Group as the Chinese government seeks to rein in the country’s property sector.

Unfortunately for investors, much of what is going on with Evergrande remains secret as its restructuring continues behind closed doors.

Earlier this week, investors woke up to the news that Evergrande shares had been suspended from trading on the Hong Kong Stock Exchange without an explanation.

However, the real estate company’s debt defaults are public knowledge after it missed several interest payments on its dollar-denominated debt.

Luckily for investors, the Chinese government is looking to manage the Evergrande crisis to ensure that it does not spill over into other economic sectors like the Lehman Brothers bank collapse in the US in 2008, triggering the global financial crash.

*This is not investment advice. Always do your due diligence before making investment decisions.

China HGS Real Estate Stock price.

Tradingview chart of China HGS Real Estate Stock Price 07-01-2022
Source: Tradingview

China HGS Real Estate stock rallied 28.05% to trade at $2.83, rising from Thursday’s closing price of $2.21.