Asset managers doubled their European short positions in October as concerns over an economic slowdown in the continent grew.
According to data from SEI Novus covering over €30bn in short positions from more than 150 managers, consumer discretionary stocks accounted for 54.5% of all short activity in Europe at the end of October, an increase from 17.7% in September.
Accounting for 11.7% of all reported European short positions, industrial stocks were the second-most shorted sector, down from 24.5% in September.
In terms of markets, Ireland was the most shorted country in October with 46.2%, followed by France with 11.7% and the United Kingdom with 10.8%.
Germany overtakes UK as most shorted European market
Ireland typically keeps a relatively low short exposure, but on 3 October it suddenly rose to 44.7% and stayed over 43% until the end of the month, reaching 46.3% on 31 October.
Since February 2022, the UK has continually been among the top three countries with the highest short exposures, despite a significant decline in exposure from 20.2% at 30 September and 23.5% at 31 August.
"October saw consumer discretionary stocks become the most shorted stocks with an increase from 17.7% to 54.5% month-on-month, reflecting an expectation of declining demand as we head into the winter months," said Michelle Silsbe, director at SEI Novus.
"Strong short interest across Europe reflects expectations among managers that equity markets will continue to face headwinds as markets content with rising rates, persistent inflation and the ongoing war in Ukraine."
Short sellers turn attention to fast fashion
Bridgewater Associates was the manager with the greatest short exposure in October, accounting for 33.5% of registered short positions, followed by Marshall Wace at 32.8% and BlackRock at 3.7%.
With a 45.4% proportion of all registered European short positions, Flutter Entertainment was the most shorted stock, followed by ASML Holding, TotalEnergies, Sanofi, Alstom and Adidas.
