Hazeltree designates a stock sector by the primary economic activity of the firm. Manufacturing includes any company engaged in the mechanical, physical, or chemical transformation of materials, substances, or components into new products.
Supply-chain stress and freight costs
"If the Iran war isn’t resolved soon, there is a clear risk of global economic disruption, which is bad news for manufacturing companies given they are economically sensitive," Daniel Coatsworth, head of markets at AJ Bell, said.
The war has driven up oil prices and reignited concerns about interruptions to tanker movements. Even without a complete closure of the strait, heightened risk has raised insurance, freight and commodity costs.
"Other potential risks to manufacturing profit margins are greater transportation costs if shipping-route disruption leads to higher freight rates which then spreads across the shipping industry," Coatsworth said.
Before the war began on February 28, around 90 to 110 vessels passed through the strait daily, but flows collapsed by more than 90% at the height of the disruption, LSEG data shows.
"In terms of things like freight rates, even those routes which don't really go near the Middle East ... you're seeing sort of supply chain stress," Andrew Simms, a senior equity analyst at Berenberg, said.
"The route from Shanghai to L.A., for example, the freight rates there have more than doubled in the past few months."
Manufacturing becomes top June short target
Global hedge funds bet heavily against manufacturing stocks in June, data from Hazeltree shows, as investors grew more concerned about supply-chain disruption from renewed tensions around the Strait of Hormuz.
A re-escalation of attacks by the U.S. and Iran has cast doubt on an interim deal to help end the war. Hopes of a normalisation of shipping traffic through the waterway had previously lowered commodity prices and lifted shares in manufacturing companies.
By Tuesday, U.S. President Donald Trump had reimposed a naval blockade of all Iranian ports and threatened to hit power plants and bridges next week unless Tehran resumed negotiations.
Hedge funds shorted — or bet against — more manufacturing stocks than those in any other sector in June, according to the Hazeltree data released on Wednesday.
The most June top picks for hedge fund short bets, where speculators wager that a stock price will fall, were those in the manufacturing sector, the Hazeltree data showed. This was three higher than in May.
Companies cited in the manufacturing short bets
That cohort includes companies that rely on imported components, such as Canadian Solar CSIQ.O, Japanese carmaker Toyota 7203.T and Puma PUMG.DE, according to the Hazeltree data, which is based on figures from 600 asset managers tracking 16,000 global stocks.
The companies did not immediately respond to Reuters requests for comment.
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