Short selling of global equities has fallen 38 per cent over the last year while investors have recently moved heavily into bank stocks, according to a new fund flow analytics tool launched by Data Explorers, a provider of short selling and securities lending data.
Data Explorers’ Portfolio Analytics dashboard is a tool for fund managers to navigate long and short fund flow in the otherwise opaque securities lending market.
“With so few shorts to cover, markets could drop if worldwide economic conditions deteriorate,” says Will Duff Gordon, senior analyst at Data Explorers. “Short selling can act as a brake on falling prices, since people have to cover their shorts by buying back the shares.”
The Portfolio Analytics dashboard sheds light for the first time on long flow (supply), short flow (demand) and price (fee) in the securities lending market, based on data gathered from 150 custodian banks, asset managers, pension funds, sovereign wealth funds and insurance companies.
Short selling of global equities is 38 per cent lower year on year, while short selling in corporate bonds has increased 39 per cent.
Institutions are betting on a recovery for embattled banks and are increasing their holdings across the board: JP Morgan, Citigroup, Wells Fargo, CSFB, Deutsche Bank, Lloyds, Barclays and Nordea. However, sentiment is still negative towards some mid-sized European banks.
