Brexit bears still in hibernation
18 January 2017 London
Image: Shutterstock
Short interest in shares across the FTSE 350 is at a three-month low, while UK equities are boasting their longest positive streak on record, according to IHS Markit.
Market concerns around the increasingly likely chance of the UK perusing a so-called ‘hard Brexit’ has been confined to the foreign exchange market.
The pound is yet to recover from its dramatic plunge immediately after the referendum result was announced, but UK equities are building on a rally that began in the final weeks of 2016.
In turn, short sellers appear reluctant to bet against the market’s current trajectory.
IHS Markit highlighted in a research note that the average demand to borrow from within the FTSE 350 now sits at 2 percent of shares outstanding, 12 percent lower than the average registered in early December last year.
“This covering marks the largest monthly fall in average UK short interest since the referendum back in June, underscoring the improving investor mood”, explained Simon Colvin, the note’s author.
“A further dig into the numbers shows that the covering has been led by the mid-cap FTSE 250 end of the index, whose relatively large UK exposure made them favourite short targets following the referendum.”
UK equity exchange-traded funds also saw over £160 million of inflows from European and overseas listed funds so far in 2017. US investors accounted for two thirds of the inflows.
Market concerns around the increasingly likely chance of the UK perusing a so-called ‘hard Brexit’ has been confined to the foreign exchange market.
The pound is yet to recover from its dramatic plunge immediately after the referendum result was announced, but UK equities are building on a rally that began in the final weeks of 2016.
In turn, short sellers appear reluctant to bet against the market’s current trajectory.
IHS Markit highlighted in a research note that the average demand to borrow from within the FTSE 350 now sits at 2 percent of shares outstanding, 12 percent lower than the average registered in early December last year.
“This covering marks the largest monthly fall in average UK short interest since the referendum back in June, underscoring the improving investor mood”, explained Simon Colvin, the note’s author.
“A further dig into the numbers shows that the covering has been led by the mid-cap FTSE 250 end of the index, whose relatively large UK exposure made them favourite short targets following the referendum.”
UK equity exchange-traded funds also saw over £160 million of inflows from European and overseas listed funds so far in 2017. US investors accounted for two thirds of the inflows.
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