Short-sellers crowding into Great Wall Motor Co. are being vindicated -- and they’re lining up for more.

China’s stocks extended gains in afternoon trading, with the steepest rally in financial shares since August spurring speculation that state-backed funds were active in the market.

Investors are snapping up a U.S.-listed exchange-traded fund dedicated to Pakistani stocks before the nation’s entry into MSCI Inc.’s emerging-market index next week.