Tuesday, January 31, 2023

Germany passes UK as top short-seller target

German-listed companies were subjected to the most short positions in Europe last month, as high energy prices darken the winter outlook for its manufacturing industry.

Over a quarter (25.5%) of shorts (among Esma-regulated countries and the UK) were targeting German PLC. This pushed it above the UK (20.2%) despite the country’s economic crisis sparked by a negative market reaction to new Prime Minister Liz Truss’s growth plans.

“In September, the UK’s political and economic troubles were overshadowed by increasing short interest in Germany, which faces a tough winter as the war in Ukraine and rising energy costs impact the industry,” said Michelle Silsbe, director at SEI Novus, which compiled the data from public sources.

“Short interest is also revealing pressure points in sectors adapting to possible headwinds, with the prospect of recession continuing to be felt in industrials, with funds increasing their positions in anticipation of weakening demand, and in financials, as some institutions struggle to tackle the impacts of rising inflation and rates.”

The top 5 most shorted European stocks by size, as a proportion of all registered European short positions, as of 30 September were:

  •  ASML Holding NV, 3.7%
  •  C&C Group PLC, 3.5%
  •  SAP SE, 2.2%
  •  Koninklijke Philips NV, 2.1%
  • Rentokil Initial PLC, 2%