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Morgan Stanley says investors are betting hard against 2 high-flying electric vehicle stocks

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Beijing auto show in 2020

Evelyn Cheng | CNBC

Investors are stepping up their bets that two of China’s high-flying electric car companies will see share prices drop.

That’s according to Morgan Stanley’s analysis of the top Chinese stocks listed in the U.S. and Hong Kong that have seen the greatest increase in short interest versus last month.

Short selling refers to a trading strategy that allows investors to profit if a stock price drops. The process involves borrowing shares, selling them and then buying them back later at a lower price. If the share price does not fall, the short seller will try to minimize losses by buying back shares, which now cost more.

The April 13 report listed 10 names. Here are the top five, in descending order of greatest increase in short interest:

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