Increased trading of banking equities as market storm clouds gather
An interesting report from paddypowertrader trader has come in. Despite spread betting having a reputation for catching investors out in extremely volatile markets the Irish firm has reported a 110% increase in clients placing equity trades in the past 24 hours.
Recent international market turmoil in the banking sector seems to have encouraged speculation rather than scared investors off.
“Compared with an average trading day we have seen a 110% increase in bank shares trades, as well as those short selling both the UK and US indices. At the top of the list of those being traded are Merrill Lynch, AIG, Allied Irish Bank, Anglo Irish Bank, Barclays and Alliance & Leicester”, said Davin McAnaney of Paddypowertrader.
It is interesting to note that the biggest UK faller HBOS is not in their top 5.
However the eye of the storm still centres on Merrill Lynch and Lehman Bros who have both suffered from an acute lack of liquidity and…minimal investor confidence.
Lehman Bros has filed for Chapter 11, bringing the fourth largest investment bank in the US to a close. Merrill Lynch, are being bought by Bank of America at a cost of $50bn.
According to McAnaney “Spread bettors have really been able to gain from the see-saw movements in the market.
“We have seen a huge increase in the number of trades compared to regular trading activity. Even though volatile markets such as these are difficult to predict, we have also seen a glut of clients taking profits from short selling the rapidly changing markets. It’s a good time for spread betting as it offers much more diverse investment opportunities
“Clients have been going short or betting against a rise in the prices of banking shares in the past number of weeks. US Housing based lenders Fannie Mae and Freddie Mac were the subject of nationalisation last week, but before they bowed out of the market they earned spread bettors going short quite a lot of money. There are rumours that the top ten banking institutions in the global market have put €70bn into an emergency fund, which says there is still some way to go until this storm has passed
“The write downs of banking institutions and movement of their shares is definitely hitting the headlines and leading many spread bettors to take a short position in the hope of making profit. The markets are continuing to swing wildly fuelled by rumours that there are many more toxic assets and banking write-downs to come. This means more opportunities for spread betting.”
**Rolling Daily Market Prices. US Shares quoted at 8.50pm, 16-Sep-08; Ireland and UK Shares quoted at 10.15am, 17-Sep-08.
Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
'Storm Clouds, Spread Betting and Banking Equities' by paddypowertrader, updated 18-Sep-08
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Risk Warning: Spread betting carries a high level of risk to your capital and you may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
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