German stocks were the most shorted in Europe during September, despite ongoing volatility in the UK market, analysis from SEI Novus has found.
The analysis firm’s monthly pan-European short position data for September continued to place the UK alongside Germany at the top of the rankings, marking a consistent trend that has been unfolding since February this year.
Germany recorded short exposure of 25.47%, followed by the UK with 20.2% and Sweden with 11.41%.
The number of overall registered short positions in Europe increased to 483 on 30 September, up from 452 a month prior. The latest findings mark a rebound to rates not seen since July.
Industrial sector stocks were the most shorted during September, ending the month accounting for 24.47% of total short activity in Europe, up from 22.98% in August.
The second most shorted sector was consumer discretionary stocks, which accounted for 17.72% of registered European short positions, down from 18.85% in August.
Short positions in financial stocks spiked in September, jumping from 7.08 % at the end of August to 10.99% at the end of September.
Michelle Silsbe, director at SEI Novus, said: “Turbulence in European markets has driven increasing short activity as investors seek returns in an increasingly tough market and as the economic outlook darkens.
“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.
“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.”
Bridgewater Associates was the manager with the greatest short exposure in September, according to SEI Novus’ findings, accounting for 19.32% of registered short positions.
Following this was Marshall, accounting for 15.97%, and BlackRock Institutional Trust Company N A accounting for 7.16%.
These three managers also held the greatest short exposure the previous month, with a significant increase from Bridgewater, which ended August at 16.34%.
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