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MNI BRIEF: Fiscal Space Key To Short Sellers Early Covid Gains

(MNI) LONDON
(MNI) Frankfurt

Short sellers anticipated the importance governmental fiscal space would play in supporting vulnerable firms at the outbreak of the Covid-19 pandemic, a discussion paper published by Germany's Bundesbank found, leading to a clear rise in short selling positions in companies with low liquidity that were also headquartered in countries with poor credit ratings.

The shift in strategy ahead of February 2020's market collapse resulted in abnormally high returns, while in countries with a good credit rating, no such change in short sellers' strategy was observed, the paper concluded.

MNI London Bureau | +44 20 3983 7894 | luke.heighton@marketnews.com
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MNI London Bureau | +44 20 3983 7894 | luke.heighton@marketnews.com
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