The number of net short positions reported to the UK’s Financial Conduct Authority from the start of the year through to May 25 was up by a quarter compared to the same period in 2019, research by ETF provider GraniteShares shows.
However, despite this overall increase of 25%, the findings reveal that the number of short position sizes of 3% or more in 2020 was lower than the same period last year.
According to the study, there were 1,569 short positions of at least 1% on UK stocks reported to the FCA from January 2 through to May 25. It also found that there were 305 short positions of 2% or more, and 70 of 3% or higher.
This year’s “huge” market volatility is said to be behind the increase and, possibly due to the higher number of opportunities to short individual stocks, capital has been spread across a greater number of short positions, the report states.
The largest net short position reported to the FCA up until May 25 was 16.73% against Premier Oil held by Asia Research & Capital Management Ltd.
Will Rhind, founder and chief executive at GraniteShares, said tension in the Gulf and then the coronavirus pandemic had increased stock market volatility this year.
“The volatility has led to opportunities to take short positions. Investors will have acted for different motives, in some cases to hedge risk and in others to profit from falling prices.”
He said US-China relations, the looming US presidential election and UK-EU negotiations suggested markets could see more volatility in coming months.
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