UK supermarkets see shorting surge
04 March 2016 London
Image: Shutterstock
The food and retail sector is the most shorted in Europe, with UK supermarkets bearing the brunt, according to Markit.
Most European sectors have seen an increase in short interest over the last year, the one exception being the technology hardware and equipment sector, which has seen a 17 percent dip, year-to-date, and now has 4.2 percent of shares out on loan.
The sector that has seen the biggest jump, year to date, is automobiles and components, which has seen a 29 percent increase in short interest, reaching shares out on loan of 2.9 percent.
The most-shorted sector is food and staples retailing. It has a total of 7.7 percent of shares currently out on loan, representing a 19 percent increase, year-to-date.
According to Markit, this has been particularly evident among UK retailers, with conditions of deflation and competition negatively affecting earnings.
Sainsbury’s saw a spike in short selling activity in January, when it announced plans to acquire Argos. According to Markit, this reflects scepticism about the deal, proven valid by news that South African firm Steinhoff had offered a higher cash offer for Argos.
Short interest in Sainsbury’s increased by 27 percent, year-to-date, with shares outstanding on loan currently standing at 21.6 percent.
Online supermarket Ocado saw a dip in share prices in 2015 after rumours surfaced of Amazon entering the UK marketplace. While talks of a partnership led to an uptick in early 2016, Amazon actually partnered with Morissons shortly afterwards.
As a result, Ocado has seen a 12 percent dip in share price, year-to-date, and a 70 percent increase in short interest.
Morrisons, on the other hand, has only seen a 2 percent dip in short interest, with 20 percent of shares out on loan, despite sellers suffering losses estimated to be around $200 million.
Most European sectors have seen an increase in short interest over the last year, the one exception being the technology hardware and equipment sector, which has seen a 17 percent dip, year-to-date, and now has 4.2 percent of shares out on loan.
The sector that has seen the biggest jump, year to date, is automobiles and components, which has seen a 29 percent increase in short interest, reaching shares out on loan of 2.9 percent.
The most-shorted sector is food and staples retailing. It has a total of 7.7 percent of shares currently out on loan, representing a 19 percent increase, year-to-date.
According to Markit, this has been particularly evident among UK retailers, with conditions of deflation and competition negatively affecting earnings.
Sainsbury’s saw a spike in short selling activity in January, when it announced plans to acquire Argos. According to Markit, this reflects scepticism about the deal, proven valid by news that South African firm Steinhoff had offered a higher cash offer for Argos.
Short interest in Sainsbury’s increased by 27 percent, year-to-date, with shares outstanding on loan currently standing at 21.6 percent.
Online supermarket Ocado saw a dip in share prices in 2015 after rumours surfaced of Amazon entering the UK marketplace. While talks of a partnership led to an uptick in early 2016, Amazon actually partnered with Morissons shortly afterwards.
As a result, Ocado has seen a 12 percent dip in share price, year-to-date, and a 70 percent increase in short interest.
Morrisons, on the other hand, has only seen a 2 percent dip in short interest, with 20 percent of shares out on loan, despite sellers suffering losses estimated to be around $200 million.
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