Short-sellers sense an opportunity as trade tensions brew

Escalating trade tensions between China and the US may have sent tremors across the US stock market, but short-sellers are taking the opportunity to boost bearish bets against US companies exposed to a fullblown trade war.

Planemaker Boeing, automaker General Motors and package delivery company FedEx Corp – companies that could feel the pain from growing trade tensions with China – have drawn a noticeable pickup in shorting activity this month, according to financial analytics firm S3 Partners.

“I think the change in short interest is directly related to the increase in trade tensions,” said Ihor Dusaniwsky, head of research at S3.

Short-sellers aim to profit by selling borrowed shares with the hope of buying them back later at a lower price.

On Friday, US President Donald Trump said he was pushing ahead with hefty tariffs on $50 billion worth of Chinese imports, and China immediately vowed to respond in kind.

Multinationals that rely on China for large parts of their businesses are seen as particularly at risk from a potential trade war.

Boeing, the single largest US exporter to China, saw a 3 percent increase in short interest in June, while short interest for General Motors jumped by 12 percent, according to the S3 data.

Short interest at FedEx, which is often considered a bellwether for the US economy, and whose shares have come under pressure due to the growing threat of a trade war, grew by 8 percent this month, the data showed.

Chipmakers were also in shortsellers’ crosshairs. Nvidia and Micron Technology Inc are among stocks that have seen the largest increase in short interest since Friday.