- US short-sellers profited nearly $US344 billion from the market’s February 19 peak to March 19, according to financial analytics firm S3 Partners.
- The month also saw total shares sold short increase by about $US41 billion as market volatility drove some of the biggest single-day declines since 1987.
- The tech sector saw the biggest jump in short-selling over the period at $US3.94 billion, according to S3.
- Pharmaceutical company McKesson saw the biggest jump in shares shorted among individual stocks, though financial sector firms including Morgan Stanley, Charles Schwab, and Bank of America followed close behind.
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Investors betting on US stocks to tumble profited billions as the S&P 500 slid from its record high to a 29% decline in a single month.
Short-sellers saw roughly $US344 billion in mark-to-market gains in the period from the S&P 500’s February 19 peak to March 19, according to financial analytics firm S3 Partners. The month also saw the total amount of shares sold short jump by about $US41 billion as market volatility surged and fuelled the biggest single-day losses since 1987.
Short positions involve investors borrowing shares to buy them later at a cheaper price. The more an asset’s value drops, the more an investor profits from their short.
The tech sector saw the biggest jump in short-selling over the period, according to S3, with a $US3.94 billion increase in shares shorted. Healthcare stocks followed close behind with a $US3.85 billion increase.
Pharmaceutical company McKesson saw the biggest jump in shares shorted among individual stocks with a $US3.2 billion increase. Financial sector firms including Morgan Stanley, Charles Schwab, and Bank of America made the list of top 20 jumps in short-selling activity, S3 said.
The historically long bull market ended on March 12 after coronavirus fears and an oil-price war dragged equities more than 20% from their peak values. The pandemic has quickly morphed from a daunting market risk to the driver of a serious economic slump. Several banks have since called for a US recession to begin in the first half of 2020 as the virus drives stay-at-home orders and forces businesses to halt operations.
By March 19, the S&P 500 was down nearly 30% from its all-time high as investors continued to wait for fiscal relief plans from Washington, D.C. Senate Democrats blocked a trillion-dollar stimulus package Sunday evening, with the party calling for stronger protections for workers affected by the coronavirus and its economic fallout.
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