Short sales registered with the Stock Exchange of Hong Kong soared late this week, as punters and money managers positioned themselves for an expected drop in the Hang Seng Index next week. James Osborn, sales director at ING Barings, said: 'People are taking a view ahead of the [US] figures tonight, selling shares short.' US employment figures, released in Washington after the Hong Kong market closed, showed the economy there remained strong, which could confirm the market's worst fears about the likelihood of higher interest rates. Stocks in New York showed surprising resilience to the news, edging higher in early trade, though some traders questioned whether the market would stay in positive territory. Hong Kong stocks fell 1.19 per cent this week ahead of the closely watched employment data, and a good chunk of that selling seems to have come from short sales. Figures from the stock exchange indicate that about 11 per cent of the shares that changed hands yesterday were sold short. SCMP Holdings, Shangri-La Asia and Cathay Pacific were the heaviest targets; about half of total turnover in each of those counters was through registered short sales, though nearly every Hang Seng constituent showed heavier than usual short selling. Short selling involves borrowing a security to sell on the open market to take advantage of an expected price decrease. The seller hopes to buy the shares back at a lower price and return them, making a profit on the transaction. BZW sales director Airy Lau said the market was starting to turn bearish at the same time that domestic investors were getting used to the system for short sales. Short orders started to pick up on Wednesday and jumped on Thursday, when they accounted for 13 per cent of total turnover. On a normal day, they would account for less than 1 per cent of turnover. Actual short sales could have been much higher, as many short transactions by overseas investors are not registered with the exchange.