Investing in short positions on the São Paulo Stock Exchange, the B3, has never been at such a high level in its history. Short positions are when investors bet on stocks falling. Today they represent 3.25% of the total value of the Exchange, or R$ 130 million, according to the founding partner and analyst at Encore Asset, João Luiz Braga.
The total of “shorts” on the Stock Exchange, divided by the market value of companies, is at the highest point ever recorded, says Braga.
In his diagnosis, the economist took into account the size of the short position in reais (R$) — of all listed companies — and compared it with the market value of the positions. This balance is the relative average.
“This relative short position on the stock exchange is at the highest level on record. That is, never in history have Brazilian investors been so sold on the stock exchange, in relation to their value”, he assesses.
According to data from Bloomberg, today approximately 3.25% of the total value of the Exchange is sold. In 2018, that number reached 1.6%. “Currently, the Exchange is worth around R$ 4 trillion. So, if you have R$ 130 million in short positions on B3”, explains Braga.
However, Braga says that the nominal value is not what matters in this analysis. “What should be highlighted is that the Exchange is in the biggest short position in history”.
unprecedented scenario
Regarding this surge in the level of short positions, Braga attributes a slice to multimarket funds. According to him, this asset has been growing over the years. “This type of fund holds a short position. Part of this increase is due to the creation of new multimarkets, which did not exist before”.
Braga says that the Exchange has become yet another vehicle for the various funds to put their visions into practice, given that it has gained liquidity and new stock options over the last 15 years. “Several people thinking everything is bad at the same time, can lead the market positioning to a very uncomfortable situation. Any good news, no matter how small, leads to a race of who manages to shorten the short first, given that everyone is on the same end ”, he points out.
This Tuesday (20th), the market was encouraged by the possibility of the PEC of the Burst having a one-year term. Fernando Haddad, future Minister of Finance, discussed the terms of the proposal and the demands of some groups to approve the text.
From this perspective, the dollar closed down sharply by 1.97%, quoted at R$5.205 on sale. Meanwhile, the Ibovespa was up 2% around 5:15 pm, at 106,892 points.
Futures on the Stock Exchange
However, Braga claims that it is too early to say that this is already a trend, but, he says, it is what we will see for a long time. “It’s time to try to take advantage of an opportunity here or there, but we’re still thinking about having a balanced portfolio (…), defensive, cheap and with a lot of expected return”.
The secret, according to the economist, is to lengthen the analysis and investment period. “There is a lot of paper that, even considering a very negative scenario, is very cheap if you look at 2024”, he bets.
The economist claims that there are many people operating these assets for the short term, but this could make the market more volatile and give opportunity to those who extend the term.
To conclude, Braga warns that there are many cheap assets to take advantage of.
Source: CNN Brasil

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