© Reuters. FILE PHOTO: The brand for Goldman Sachs is seen on the buying and selling ground on the New York Inventory Alternate (NYSE) in New York Metropolis, New York, U.S., November 17, 2021. REUTERS/Andrew Kelly/File Picture
By Carolina Mandl
NEW YORK (Reuters) -European hedge funds have quickly reduce their publicity to U.S. banks for the reason that starting of the yr, whereas roughly holding their positioning in European ones, Goldman Sachs informed purchasers in a latest report.
General, shares in European banks are outperforming U.S. friends as they didn’t face the deposit flight skilled in the USA.
The STOXX Europe 600 Banks index is up roughly 8% this yr, whereas the Dow Jones US Banks index is down 9%.
“In Europe, hedge funds have rotated out of banks and insurance coverage into monetary companies up to now couple of months, however nonetheless positioning in European banks stays stronger than in U.S. banks,” Goldman Sachs stated within the report obtained by Reuters.
The Wall Road financial institution runs one of many world’s largest prime brokerages, which offers lending and buying and selling companies to traders and is ready to see how massive hedge funds and asset managers are transferring.
Goldman Sachs didn’t instantly touch upon the report.
The info reveals European traders are extra bullish about banks on their very own continent, whereas they’ve a extra impartial method to U.S. banks.
The Wall Road financial institution makes use of the so-called lengthy/quick ratio to gauge traders’ sentiment, dividing lengthy positions by quick positions.
By the tip of June, this ratio for U.S. banks was near 100%, which means hedge funds are on common lengthy one financial institution inventory whereas quick one financial institution inventory.
For European banks, nevertheless, the ratio was round 190%.
The hole between European hedge funds’ positioning in European and U.S. banks has widened primarily after a disaster this yr during which U.S.-based financial institution Silicon Valley Financial institution and two different lenders failed.
European banks didn’t escape unscathed. UBS acquired rival Credit score Suisse in a rescue orchestrated by the Swiss authorities, but it surely was not seen as a systemic disaster.
Globally, traders are additionally more and more betting that shares in U.S. banks will drop, knowledge supplier Ortex says.
Quick curiosity as a share of free float in U.S. banks grew to 2.3% in June from 1.8% in January, whereas staying steady for European banks, at 0.6%.
The U.S. banking disaster spooked traders throughout areas. Bridgewater Associates, one of many world’s largest hedge funds, offered U.S. financial institution shares within the first quarter amid the collapse of some regional lenders.
It exited positions in 5 U.S. banking giants, specifically JPMorgan (NYSE:) & Co, Financial institution of America Corp (NYSE:), Wells Fargo (NYSE:) & Co, Goldman Sachs Group Inc (NYSE:) and Morgan Stanley (NYSE:), regulatory filings confirmed in Might.