Short sellers look to cash in on slump in European car market

Michael Bow
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HEDGE funds are betting that companies relying on European car sales will plunge in value amid a sharp slump in new cars being sold across the region, data reveals.

Italian car firm Fiat, which releases earnings tomorrow, has shot to the top of a list of most shorted stocks, with 8.7 per cent of shares out on loan ahead of results, figures from Markit show.

The car maker, which is listed on the Borsa Italiana, has seen instances of stock lending double since October, despite a recent retreat in the lending of Fiat stock.

German car microchip maker Infineon Technologies is also on hedge funds’ short list, with double the amount of shares out on loan versus last year. It is the third most shorted stock ahead of earnings in Europe, according to the figures.

The firm, based in Neubiberg, gets 42 per cent of revenues from selling chips to car manufacturers

Last week figures showed demand for new cars in Europe fell to a 17 year low in 2012, highlighting the crisis for car makers in Europe.

Additional Markit data last week revealed French car giant Peugeot was another in-demand stock from hedgies, with 92 per cent of shares made available by owners to be borrowed by short sellers.