EU

Are you ready for the new short selling disclosure regime? Law firm Cadwalader have summarized this new regulation that applies to equities and sovereign debt. While it is good news that there will be a pan European standard form of reporting it remains to be seen if these disclosures will make any difference to financial markets.

Employment trends are always amongst the key indicators to gauge confidence in the global economy. We look at short interest across the Recruitment sector to assess investor sentiment.

Stock included: Hays Plc (LON:HAS), Adecco SA, Michael Page International Plc (LON:MPI), Kelly Services Inc. (NASDAQ:KELY), Robert Half International (NYSE:RHI), LinkedIn Corporation (NYSE:LNKD), Monster WorldWide Inc. (NYSE:MWW)

Most shorted

January is a crucial month for the Travel and Tourism sector, with up to 15% of summer holidays predicted to be booked this month. But the sector has been rocked again by Thomas Cook, which has hit another stumbling block with the lack of confidence in Carnival Cruises since the recent disaster in Italy. We drill further into the sector to highlight others subject to high or rising short interest.

Demand to borrow Dutch equities declined over 2011 and currently stands at USD 6.3 billion, just 10% above the annual low. While average short interest is only 1.83%, there are a number of heavily shorted stocks and others seeing rising levels of short interest.

Stocks include: Imtech N.V. (AMS:IM), Vistaprint NV, TomTom NV (AMS:TOM2), Unilever N.V. (AMS:UNA) and PostNL NV (AMS:PNL).

Most shorted

Short interest amongst European Durables is double that of Staples in a sign that contrarian investors believe the crisis is not over yet.

Stocks covered include: CSM NV ( AMS:CSM), Tesco PLC (LON:TSCO),Wm. Morrison Supermarkets plc (LON:MRW), J Sainsbury plc ( LON:SBRY), Fiat Industrial SpA (BIT:FI), Peugeot SA (EPA:UG), Daimler AG (FRA:DAI).

While average levels of short interest across all French equities remains low, demand to borrow is significantly higher amongst larger stocks, with media and technology focused companies bearing much of the brunt of negative investor sentiment, which has increased by a third since August. We use securities lending flows to highlight the stocks seeing the highest absolute levels of short interest as well as those seeing the fastest rate of growth.

The recent market turmoil has threatened to derail the global recovery and recent economic measures of European output have been disappointing. In Sweden, the fall in industrial production as the demand for exports declines has raised alarms given the country’s reliance on exports for half of its economic output. As the markets rattled with volatility over the past month and billions were shed of market value, the securities lending activity in Sweden was relatively busier than normal.

Market regulators in Belgium, France, Italy and Spain have placed temporary restrictions on new covered short sales for a specific list of financial stocks. We have conducted the following historical analysis:

- Data Explorers data shows that the average % of stock on loan for the named stocks is below the market average in each country with the exception of Italy. This has been the case throughout 2011

A reminder of the effects of short selling bans around the world

This morning the share price of Danish jeweller company, Pandora A/S, fell by over 60% following adjustments lowering full year forecasts and the CEO also resigning. Since its IPO in October 2010, it has been subject to high short selling activity.