Investors in Japanese stocks turned the most bearish Thursday since at least 2008.
Short-selling accounted for 38.3 percent of trading on the Tokyo Stock Exchange, the highest ratio since the bourse began keeping daily records more than six years ago. Energy producers, utilities and non-ferrous metal companies were targeted the most, the data show. The Topix index slid 1 percent to a one-month low.
“There are no obvious reasons for shorts to rise this much,” said Jun Yunoki, a Tokyo-based equity strategist at Nomura Holdings Inc. “But past patterns tell us that when shorts peak, people will start buying back shares and we’ll see a rally.”
After Japanese equity investors placed record bearish bets on Jan. 6, the Topix gained for five straight months. The measure is up 15 percent in 2015 amid optimism about Japan Inc.’s earnings outlook and corporate-governance improvements. That compares with a 3.3 percent advance on an index of global developed-market equities.
Short-selling surged on Oct. 30, the day before the Bank of Japan unexpectedly increased its unprecedented monetary easing, including pledging to triple stock investments, and the nation’s $1.1 trillion pension fund said it would more than double holdings of local shares. The Nikkei 225 Stock Average soared as much as 15 percent through Dec. 8, when it closed at a seven-year high.
The Topix joined a selloff in most Asian markets Thursday, with China’s Shanghai Composite Index slumping 3.7 percent and Australia’s benchmark gauge falling 1.3 percent. The Nikkei 225 slipped below its 25-day moving average Tuesday and slid below the 20,000 level today, adding to technical reasons for investors to hedge holdings, said Hideyuki Suzuki, general manager of investment-market research at SBI Securities Co.