One of the largest hedge fund players in the world has shorted the names of large European banks and other companies, taking the view that a downturn in the continent is likely.
Some of the largest investment sector players are positioning for a recession in Europe, betting against stocks of large banks and non-financial firms in the continent, Reuters and other media have reported.
Bridgewater Associates, which is based in the US with a reported $150 billion of assets under management, has placed at least $6.7 billion in bets against European stocks, Reuters said, citing data group Breakout Point.
Based on Bridgewater's public disclosures, Breakout Point calculated that the Connecticut-based fund has bet against 21 European companies so far over the past week, in sectors ranging from finance to energy. Among its biggest short bets are semiconductor-equipment supplier ASML Holding ($1 billion), energy company TotalEnergies ($705 million) and drugmaker Sanofi ($646 million).
Other groups being shorted by Bridgewater are Banco Santander, BNP Paribas, Banco Bilbao Vizcaya Argentaria, and Intesa Sanpaolo. Others on the list are insurance companies Allianz, ING Group and AXA.
"When it comes to magnitude of short-selling, we don't recall any other money manager coming close to this, except for Bridgewater itself," Breakout Point was quoted as saying.
Bridgewater was founded by billionaire Ray Dalio.
A few weeks ago, UBS urged clients to position for rising and elevated inflation ahead of worrying about a recession, although the Swiss bank said that a recession would be inevitable at some point.
Global equities have fallen this year, hit by worries about rising inflation and interest rates, supply chain disruptions post-Covid-19, and hits to global trade from the Russian invasion of Ukraine. The MSCI World Index of developed countries’ equities has fallen 22.43 per cent since the start of January 2022.