Pre-election jitters hit US short sellers
04 November 2016 New York
Image: Shutterstock
Short sellers have been remarkably timid in the lead up to one of the most unpredictable US presidential elections in recent history, according to IHS Markit’s Simon Colvin.
Current average short interest across the S&P 500 index is down 17.5 percent from the highs seem earlier in the year during the rush to short the commodities sector.
IHS Markit’s data reveals that only 2.8 percent of shares outstanding across the S&P 500 index are being utilised by short sellers.
“US equities have experienced more than their fair share of volatility in the weeks leading up to next Tuesday’s election, but market jitters have yet to stir short sellers as the demand to borrow S&P 500 shares has remained relatively flat over the last few months,” explained Colvin.
“Despite the recent covering index, the current average shoring activity is still elevated from the levels seen 24 months ago which speaks to the heightened levels of uncertainty in the market at present.”
Colvin also noted that the hottest sectors to short have recently shifted. Telecommunication firms are now the most shorted, having experienced an 8 percent jump in short interest over the past month.
In contrast, the energy sector, which saw the high conviction in Q1 2016, experienced a 9 percent drop off in October.
Current average short interest across the S&P 500 index is down 17.5 percent from the highs seem earlier in the year during the rush to short the commodities sector.
IHS Markit’s data reveals that only 2.8 percent of shares outstanding across the S&P 500 index are being utilised by short sellers.
“US equities have experienced more than their fair share of volatility in the weeks leading up to next Tuesday’s election, but market jitters have yet to stir short sellers as the demand to borrow S&P 500 shares has remained relatively flat over the last few months,” explained Colvin.
“Despite the recent covering index, the current average shoring activity is still elevated from the levels seen 24 months ago which speaks to the heightened levels of uncertainty in the market at present.”
Colvin also noted that the hottest sectors to short have recently shifted. Telecommunication firms are now the most shorted, having experienced an 8 percent jump in short interest over the past month.
In contrast, the energy sector, which saw the high conviction in Q1 2016, experienced a 9 percent drop off in October.
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