The GameStop Corporation GME short squeeze frenzy sweeping the United States markets has extended itself worldwide.
What Happened: Heavily shorted stocks in Europe surged on Wednesday with the likes of German pharmaceutical company Evotec SE EVTCY closing 9.6% higher in Frankfurt and publishing firm Pearson Plc PSO closing higher by 13.97% in London, reported Bloomberg.
Evotec and Pearson surged as much as 30% and 19% on Wednesday, while other heavily shorted stocks such as French property developer Unibail-Rodamco-Westfield SE UNBLF and real estate investment trust Klepierre SA KLPEF rose 17% and 22%, respectively.
Nokia Oyj (NYSE NOK), which soared 38.48% in New York, has gained 15% this week in Europe.
Why It Matters: The upward movement among short stocks in Europe is less extreme than in the U.S. where the Reddit forum r/WallStreetBets has led to a 685% increase in the stock of GameStop this year and 804.54% spike in the shares of AMC Entertainment Holdings, Inc. AMC
Melvin Capital Management — the short seller who suffered a significant debacle over GameStop — has a 6.2% short on Evotec, Reuters reported.
Other Melvin shorts are said to include Polish video game company CD Projekt S.A. OTGLY and battery firm Varta AG VARGF.
CD Projekt ended the trading day 7.77% higher and Varta AG shares closed higher by 6.22% at press time in Frankfurt on Wednesday.
The rally in stocks in Europe may be an indication of institutional investors reversing their shorts, according to John Moore of Berkeley Capital Wealth Management, Bloomberg noted.
“I think partly it is to do with the Reddit story, but when we see moves like this in some of the bigger names, as in Pearson, that tends to be from an institutional level,” said Moore.
Small investors in India have jumped on the action as well, even though they are not allowed to take on leverage while trading non-Indian stocks, Bloomberg reported separately. Stockal, a platform for retail investors to invest in U.S. equities from India, said GameStop accounted for 15% of all trades on its platform on Wednesday.
In China, GameStop and AMC have become the most-traded U.S. stocks on the trading app of Futu Holdings, Ltd FUTU.
Meanwhile in Australia, GME Resources — a small nickel and cobalt explorer — saw its shares spike 53% on Thursday thanks to its ticker sharing similarity with GameStop, Reuters reported separately.
"There are people buying the stock for shits and giggles, just because of the ticker symbol," said Kyle Rodda, a market analyst at IG Markets, Melbourne.
The shares were up 13.33% at press-time in Sydney.
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