Bearish equity positioning increasing across regions
SPY•Investors increased bearish bets on global equities over the past week, reducing exposure to the Nasdaq and S&P 500 and adding shorts in European and Asian markets, Citi’s positioning model showed.
1. Investors add bearish bets
Citi’s latest equity positioning model showed investors growing more cautious on global equities over the past week. In the US, they reduced exposure to the Nasdaq and S&P 500 as traders added bearish positions.
2. Europe and Asia weaken
Citi strategist David T. Chew said broad-based inflows into European shares reversed. Fresh FTSE longs were covered, while shorts were added in the DAX and Euro Stoxx; the Euro STOXX 50 posted its sharpest weekly fall since July. In Asia, investors added bearish positions in Hong Kong’s Hang Seng and South Korea’s Kospi despite already heavily negative positioning.
3. Shorts vulnerable to rally
Chew said highly profitable short positions in the Hang Seng, Kospi and Russell 2000 would be vulnerable to a positive change in sentiment. The concentration of bearish bets across indices could leave room for a sharp relief rally if a positive catalyst emerges.
