New analysis of industry data by exchange-traded fund provider GraniteShares shows the number of net short positions reported to the UK's Financial Conduct Authority in January and February this year was down by around 12 percent when compared to the same period last year.

However, in the first half of this month, there were 40 percent more net short positions reported to the FCA than in the same period last March.

GraniteShares says the initial stock market falls from the outbreak of coronavirus would normally have encouraged the shorting of stocks, but the lack of visibility around how this crisis would evolve had the reverse effect.

As investors developed a better understanding of the scale of the problem and the issues that lie ahead, GraniteShares says its analysis suggests that a growing number believe there are some attractive opportunities to short specific stocks, and this helps explain why more net short positions were reported to the FCA during the first half of March than the same period last year.

GraniteShares analysis of FCA data shows that in January and February 2019 there were 906 and 865 short positions respectively reported to the FCA.

The corresponding figures for the first two months of this year were 719 and 833 respectively, which is a decline of 219 or 12 percent. Between March 1 and March 15 2019, there were 507 short positions reported to the FCA, but for the period March 2 to March 16 2020, the corresponding figure is 712 – a rise of 40 percent.

GraniteShares says its research also found that the number of net short positions of 1 percent or more reported to the FCA in January and February this year was around the same as the first two months of 2019. However, for the first half of this month (March) the number was 43 percent higher than the same period last year.

Will Rhind, Founder and CEO at GraniteShares commented: "The coronavirus has led to huge volatility in the world's stock markets with billions of dollars being quickly wiped off valuations.

"The data would appear to show that initially investors were initially taken by surprise and therefore not able to hedge portfolios in a way that might be expected. However, it reveals a pick-up in shorting activity in early March as investors realized the potential impact of the virus on economic activity.

"On a daily basis, there is an update of the human tragedy of this virus, and understandably this has spooked investors, including the more sophisticated ones who look to hedge risk by shorting stocks."

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New analysis of industry data by exchange-traded fund provider GraniteShares shows the number of net short positions reported to the UK's Financial Conduct Authority in January and February this year was down by around 12 percent when compared to the same period last year.

However, in the first half of this month, there were 40 percent more net short positions reported to the FCA than in the same period last March.

GraniteShares says the initial stock market falls from the outbreak of coronavirus would normally have encouraged the shorting of stocks, but the lack of visibility around how this crisis would evolve had the reverse effect.

As investors developed a better understanding of the scale of the problem and the issues that lie ahead, GraniteShares says its analysis suggests that a growing number believe there are some attractive opportunities to short specific stocks, and this helps explain why more net short positions were reported to the FCA during the first half of March than the same period last year.

GraniteShares analysis of FCA data shows that in January and February 2019 there were 906 and 865 short positions respectively reported to the FCA.

The corresponding figures for the first two months of this year were 719 and 833 respectively, which is a decline of 219 or 12 percent. Between March 1 and March 15 2019, there were 507 short positions reported to the FCA, but for the period March 2 to March 16 2020, the corresponding figure is 712 – a rise of 40 percent.

GraniteShares says its research also found that the number of net short positions of 1 percent or more reported to the FCA in January and February this year was around the same as the first two months of 2019. However, for the first half of this month (March) the number was 43 percent higher than the same period last year.

Will Rhind, Founder and CEO at GraniteShares commented: "The coronavirus has led to huge volatility in the world's stock markets with billions of dollars being quickly wiped off valuations.

"The data would appear to show that initially investors were initially taken by surprise and therefore not able to hedge portfolios in a way that might be expected. However, it reveals a pick-up in shorting activity in early March as investors realized the potential impact of the virus on economic activity.

"On a daily basis, there is an update of the human tragedy of this virus, and understandably this has spooked investors, including the more sophisticated ones who look to hedge risk by shorting stocks."