Asian short sellers surge to three-year high
26 November 2015 Beijing
Image: Shutterstock
Recent volatility in Asian markets is driving massive growth in demand for securities lending, according to the latest Markit research.
Interest in borrowing is up by a fifth since the start of the year, but short sellers have slightly begun to cover positions as the summer’s turmoil settles down.
The financial information provider recorded the short interest across Asia growing by 18 percent this year, reaching 2.7 percent of free float.
The rise of the Asian short seller is primarily driven by China’s market volatility, which paved the way for short sellers to build positions in every global market.
Analyst Simon Colvin explained: “The Asian market’s long-short ratio, a measure of the value of long positions sitting in lending programs to short positions, fell to a three year low during the worst of the recent volatility in late September.”
“Over this low there were eight dollars of long positions to cover every short position, down from 12 at the start of the year.”
“While the trend has fallen back somewhat in the last few weeks, the long-short ratio still indicates that the overall demand to sell the region’s shares is very much at an elevated state.”
Australia was the most shorted country thanks to its consumer sector.
In contrast, Japanese short selling has seen almost no growth since the start of the year.
Interest in borrowing is up by a fifth since the start of the year, but short sellers have slightly begun to cover positions as the summer’s turmoil settles down.
The financial information provider recorded the short interest across Asia growing by 18 percent this year, reaching 2.7 percent of free float.
The rise of the Asian short seller is primarily driven by China’s market volatility, which paved the way for short sellers to build positions in every global market.
Analyst Simon Colvin explained: “The Asian market’s long-short ratio, a measure of the value of long positions sitting in lending programs to short positions, fell to a three year low during the worst of the recent volatility in late September.”
“Over this low there were eight dollars of long positions to cover every short position, down from 12 at the start of the year.”
“While the trend has fallen back somewhat in the last few weeks, the long-short ratio still indicates that the overall demand to sell the region’s shares is very much at an elevated state.”
Australia was the most shorted country thanks to its consumer sector.
In contrast, Japanese short selling has seen almost no growth since the start of the year.
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