European short selling interest at year low
05 September 2011 London
Image: Shutterstock
Short sellers in the European equity markets have been lying low since August's volatility, according to Data Explorers.
The value of stock on loan, used as a proxy for short selling activity, has fallen since mid-August, when global equity markets plummeted on eurozone debt woes and the US fiscal crisis. It is approaching its lowest level in a year and the European equities long-short ratio is a whisker shy of an annual high at 11.4, which means longs outnumber shorts by over 11 times, writes Data Explorers.
German solar cell manufacturer, Q-Cells and global semiconductor industry supplier, Aixtron were identified as the most shorted stocks in Europe, according to the research firm's data.
The drop in short selling activities for European equities, at some one per cent of total shares, is in contrast to US equities, where average short interest passed above three per cent across the S&P500 in the last week of August, a level not seen since the end of November last year, writes Data Explorers.
"This should be viewed in context - demand to borrow and short sell has been subdued since the Lehman crash for a number of reasons: there are less hedge funds today and they are less leveraged, a prolonged bull market has meant it has been harder to pull off negative bets, regulatory uncertainty has sent many people to the sidelines, and short selling activity has tended to be confined to pockets of activity such as the Solar sector and some low-end retailers," the research firm notes.
The value of stock on loan, used as a proxy for short selling activity, has fallen since mid-August, when global equity markets plummeted on eurozone debt woes and the US fiscal crisis. It is approaching its lowest level in a year and the European equities long-short ratio is a whisker shy of an annual high at 11.4, which means longs outnumber shorts by over 11 times, writes Data Explorers.
German solar cell manufacturer, Q-Cells and global semiconductor industry supplier, Aixtron were identified as the most shorted stocks in Europe, according to the research firm's data.
The drop in short selling activities for European equities, at some one per cent of total shares, is in contrast to US equities, where average short interest passed above three per cent across the S&P500 in the last week of August, a level not seen since the end of November last year, writes Data Explorers.
"This should be viewed in context - demand to borrow and short sell has been subdued since the Lehman crash for a number of reasons: there are less hedge funds today and they are less leveraged, a prolonged bull market has meant it has been harder to pull off negative bets, regulatory uncertainty has sent many people to the sidelines, and short selling activity has tended to be confined to pockets of activity such as the Solar sector and some low-end retailers," the research firm notes.
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