25th Feb 2020 - 12:04pm

Hedge fund bears zero in as fresh coronavirus fears spark market mayhem

Submitted By Hugh Leask | 25/02/2020 - 12:04pm -

Short-selling strategies of all stripes seem set to soar amid the ongoing market mayhem which has seen global equities take a pounding following renewed coronavirus fears.

The S&P 500 was down almost 5 per cent at one point on Monday afternoon, sparked by concerns that the Covid-19 outbreak could become a global pandemic.

European markets meanwhile continued to slide on Tuesday morning, with the FTSE 100 – which closed 3.3 per cent down the previous day – shedding a further 0.83 per cent as investors fled equities for the perceived safety of assets such as gold and US treasuries.

The maelstrom follows a sharp uptick of Covid-19 diagnoses in Italy and Iran, along with more reported cases among passengers from the stricken cruise ship, Diamond Princess.

Facebook, Amazon, Apple, Netflix and Google – the five FAANG stocks emblematic of the long bull run in US equities, and seen as relatively insulated from any Coronavirus impact – all fell on Monday.

Elsewhere, the prospect of travel restrictions aimed at curbing the spread of the virus has sent airline and oil stocks through the floor.

EasyJet slipped 35.00pp to 1,222pp on Tuesday morning following a hefty 11 per cent slide the day before. The London-based low-cost carrier is currently the target of a number of bearish bets from a range of hedge funds, including well-known names such as AQR, Citadel and Marshall Wace.  AQR and Marshall Wace are also short TUI, the Anglo-German travel and tourism staple, which suffered a double-digit slide earlier this week.

Commodities markets – already precarious following the initial Covid-19 concerns and January’s assassination of Iranian general Qassem Soleimani – have seen renewed turbulence, with Brent Crude prices dropping to USD56 a barrel from more than USD68 at the start of the year. The slide comes as Pierre Andurand, founder and managing partner of Andurand Capital and renowned oil bull, saw his long-running oil-focused hedge fund strategy reportedly fall some 8 per cent in January, following back-to-back down years in 2018 and 2019.

Tags Markets