Investors appear to be turning to options and short trades in Chinese stocks (^HSI) following stimulus policies meant to bolster China’s weakening economy.

Yahoo Finance’s Seana Smith and Brad Smith track China’s economic growth over the past few months.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live

Editor's note: This article was written by Eyek Ntekim

Video Transcript

BRAD SMITH: It appears that investors are turning to shrinking short positions, fund flows, and options in Chinese stocks. This comes just after Beijing made some bold moves to inject more financial stimulus into a weakening economy.

You're taking a look at the Hang Seng. It's actually up nearly 2%. Of m trading has ended in the Asia-Pacific region for today. However, one of the huge things to track is the stimulus that's been put into the economy, and where specifically whether that be in the property or whether that starts to show up circulating more so in the stock market as well here.

And some of these moves suggest that that's exactly what's expected. And you have a lot of short covering in the near term.

SEANA SMITH: You do. It's a bit of a contrarian bet, especially when you take into account some of the data that we have gotten out, especially the GDP numbers that were released last week. Clearly, a bit worrisome here for China's recovery story here going forward. The fact that this recovery may be delayed.

An issue here for these names. But then you got to ask and it looks like at least this is some of the patterns or the thought process that we're seeing there on the Street. Just how much of this has already been priced into these stocks? The fact that some of these names have been under such a tremendous amount of pressure, whether or not there's been a bit of a shift here in thinking in terms of some of those investment opportunities within the market.

But, again, some of the stats that S3 Partners did pull together here in terms of that shift that we are seeing. They're talking about the fact that short interest on US listed Chinese and Hong Kong stocks had dropped about 15% over the 30 days through January 22. That's according to the latest data there from S3 Partners.