The London Stock Exchange has attracted more short sellers looking to profit from a potential fall in its share price than any other exchange, since it announced its proposed tie-up with Canadian rival, TMX Group.
The level of short interest - a proxy for short selling activity - was almost 70% higher for LSE stocks, compared with an average figure for the exchanges involved in this year's battle for European market share, in a sign that investors are uncertain about the UK exchange's future prospects. The LSE had 8.1% of its shares on loan between February 8 - when it announced its deal with TMX Group - and May 18, according to market monitor, DataExplorers.
The average level of short interest across the LSE, TMX, NYSE Euronext, Nasdaq OMX and the Intercontinental Exchange was 4.8% over the same period.
Short interest in Nasdaq OMX and NYSE Euronext remained particularly flat over the period, with just 3% and 1% of stocks on loan.
Will Duff Gordon, research director for Data Explorers, said: “It is hard to generalise about short selling across the stock exchange sector because investment strategies vary dependent on whether the company is the target or acquirer. It’s commonplace to short the acquirer and go long the target, if the investor believes the deal will go through”.
Over the weekend, TMX rejected a rival C$3.6bn bid from a consortium of nine Canadian asset managers and pension funds, which is attempting to derail the LSE deal. TMX directors said the offer from the so-called Maple Group did not "constitute a superior proposal” to its planned $3.2bn merger with the LSE.
© Financial News
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