The faltering recovery in China has spurred investors to raise their bearish wagers on Chinese e-commerce stocks. For example, short interest in PDD Holdings (PDD) has risen to about 8% of total shares outstanding, according to IHS Markit data. That’s higher than e-commerce peers JD.com (JD) and Alibaba Group Holding (BABA).
China’s economic recovery weakened further in May, with manufacturing activity contracting more than expected, retail sales slowing, and May exports posting their biggest decline in 4 months. The fragile recovery in China has engendered pessimism toward Chinese e-commerce stocks as evidence grows that consumer consumption in China is waning. Since rallying to a 1-1/2 year high in January, PDD Holdings dropped to a 7-month low late last month.
