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Ban on short selling shares spurs tentative recovery

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Ban on short selling shares spurs tentative recovery


After a weak start, Europe’s stock markets have risen with investors taking heart from the European Central Bank saying that the region’s commercial banks are not having to borrow so much – a sign that they are no longer facing liquidity problems.

The market also reacted positively to a short-selling ban on financial shares by France, Italy, Spain and Belgium

That is to basically stop investors betting that the price of those shares is going to fall, which in turn can push the price down.

But fund manager Dominique Dequidt with KBL Richelieu in Paris said it will not stop the speculation: “This really just a psychological thing it has the appearance of making the regulators position stronger in comparison to the speculators. But the speculators have found ways to by-pass bans on short selling over the last two years, when they were in place before.”

Analysts say the erratic trading worldwide is likely to continue because of the deteriorating outlook for the global economy.

Earlier Asian markets edged up with investors buying shares which have been oversold in the recent volatility but represent good value.

The European stocks rally boosted the euro against the dollar and the safe-haven Swiss franc.

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