The short selling of Hong Kong stocks over the past two days was largely related to Thursday's sharp market correction, with financial institutions and Hong Kong Exchanges and Clearing (HKEx) among the most heavily sold. On Thursday, the Shanghai Composite Index plunged 6.5 per cent while the Hang Seng Index dropped 2.23 per cent in its biggest one-day fall since December. Yesterday, the Shanghai Composite Index fell just 0.18 per cent, while the Hang Seng Index dipped 0.11 per cent. Ping An Insurance saw heavy short selling with turnover of HK$1.23 billion on Thursday. The mainland insurer was also one of the more heavily shorted stocks yesterday, with turnover of HK$371.18 million. Louis Tse, a director of VC Brokerage, said there tended to be short selling of a stock when investors believed its stock price was peaking out. Ping An's share price fell 4.1 per cent on Thursday and another 1.9 per cent to HK$114.10 yesterday. China Construction Bank was the stock with the most short selling yesterday, with turnover of HK$1.15 billion. Industrial and Commercial Bank of China was also among the most short sold yesterday, with turnover of HK$203.68 million. Both state-owned banks placed announcements on the website of the Shanghai Stock Exchange on Thursday night confirming state-owned investment firm Central Huijin Investment had sold their A shares. Analysts said earlier reports of the sell-down was one reason for Thursday's market correction. China Construction Bank's Hong Kong share price dropped 3.7 per cent on Thursday but rebounded 1.8 per cent to HK$7.79 yesterday. ICBC's Hong Kong share price fell 2.7 per cent on Thursday but recovered 0.3 per cent to HK$6.75 yesterday. HKEx was the second most short-sold company stock yesterday with turnover of HK$936.08 million. On Thursday, HK$1 billion of HKEx shares was short sold. The exchange operator's stock price dropped 1.8 per cent on Thursday and another 0.6 per cent yesterday. The heavy short selling in HKEx was partly due to the market correction on Thursday, a hedge fund manager said. On Thursday, there was net selling on the southbound channel of the Shanghai-Hong Kong Stock Connect due to the market correction, the manager added. "We've seen more short selling activity, but the scale wasn't sizable as only a handful of hedge funds took a short position against some stocks like Evergrande," Jason Chan, an associate manager at Southwest Securities International, said yesterday. The third most shorted stock yesterday was Evergrande Real Estate, with turnover of HK$580.73 million. The heavily indebted mainland property developer announced yesterday it was making a share placement at a lower than expected price of HK$5.67. Evergrande's share price tumbled 26.9 per cent to HK$5.05 yesterday, its lowest level in more than six years. "After [the correction on Thursday], people didn't want to take the risk with the stock," the hedge fund manager said. "When you participate in a placement, you buy lower, so you can flip for a profit. But with the market down, you can't make a profit."