European stocks have severely lagged U.S. stocks over the past year. In that stretch, the iShares MSCI EMU Index EZU is up just 6%, while the SPDR S&P 500 ETF Trust SPY is up 50.9%.
Eurozone uncertainty related to Brexit, an economic slowdown in Germany and other factors have weighed on stock performance. The European Central Bank is doing its best to stimulate economic growth by lowering interest rates into negative territory and buying bonds.
Yet despite the ECB’s best efforts, the International Monetary Fund cut its Eurozone economic growth forecast for 2019 earlier this month from 1.3% to just 1.2%. That growth rate is down from 1.9% in 2018. Germany is a particularly soft spot. The IMF is calling for just 0.5% GDP growth in Germany this year.
Top Euro Shorts
S3 Partners recently compiled a list of the Eurozone stocks with the largest short interest. Here’s a look at the 14 most shorted European stocks, according to S3.
- Wirecard AG WDI WCAGY, $2.88 billion short interest.
- Equinor ASA EQNR, $2.77 billion short interest.
- Sika AG SIKA SXYAY, $2.04 billion short interest.
- Eurofins Scientific SE ESF ERFSF, $1.68 billion short interest.
- Daimler AG DAI DMLRY, $1.63 billion short interest.
- Flutter Entertainment PLC FLTR PDYPY, $1.18 billion short interest.
- Umicore SA UMI UMICY, $1.14 billion short interest.
- Swisscom AG SCMN SCMWY, $1.11 billion short interest.
- Iliad SA ILD ILIAY, $1.06 billion short interest.
- NMC Health PLC NMC NMHLY, $967.7 million short interest.
- Anglo American plc AAL NGLOY, $950.3 million short interest.
- ThyssenKrupp AG TKA TKAMY, $923.2 million short interest.
- BNP Paribas SA BNP BNPQY, $920.3 million short interest.
- Sanofi SA SNY, $896.1 million short interest.
Some traders have large bets against European stocks as either a standalone bet that the worst is yet to come in Europe or as a hedge against long positions in the U.S. market. The long U.S. stocks/short Eurozone stocks pair trade has been a big winner for traders over the past five years.
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