Hedge funds target France as short selling bans lifted | Reuters | Business


By Maiya Keidan

LONDON (Reuters) – A group of big-name hedge funds have started betting against French companies, intervening after the lifting of a short-selling ban imposed earlier this year to calm the financial markets, showed an analysis of regulatory filings.

France joined Italy, Spain, Belgium, Austria and Greece by removing short selling bans last week. Two months ago, they banned the practice of many securities to limit the extreme volatility of the stock market caused by economic uncertainty resulting from blockages of the coronavirus.

Hedge funds engage in what is known as “short selling” by borrowing a stock from an institutional investor, such as a pension fund, and selling it when the stock goes down, earning profit.

Financial market regulators have banned short selling during periods of market turmoil in the past due to a perception that this can add to market instability.

Regulatory filings within seven days of the end of the bans have shown that France accounts for more than half of the 125 regulatory notifications of changes in short positions against companies in the six markets.

Citadel, Marshall Wace and Millennium are among the hedge funds that have taken short positions in French companies in the past week, with Peugeot and Air France-KLM among the most important targets.

The British hedge fund Sandbar Asset Management took the opportunity to double its short position on Air France to 1.2% of the company’s equity on May 20, compared to 0.6% on March 17.

Marshall Wace, based in London, also stepped up his bet against Air France last week. It rose to 2.72% on May 20 against 2.66% on March 31.

Hedge fund Millennium made a short bet on the payment company Worldline , while automaker Peugeot and industry leader Nexans cable also attracted short sellers of hedge funds.

The American hedge fund Citadel adds to short positions in the automotive supplier Valeo and CGG , manufacturer of geophysical equipment.

European short selling laws mean that only bets against companies of 0.5% or more should be made public. It was also unclear whether hedge funds compensated for long positions.

Citadel, Millennium, Sandbar and Marshall Wace all declined to comment on their short positions.

(Reporting by Maiya Keidan. Editing by Jane Merriman)


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