Short Sellers Reverse Early 2026 Losses with Mid-March Surge

Short sellers began 2026 facing a tough market backdrop. Equity markets were broadly rising, liquidity remained supportive, and optimism around AI continued to push valuations higher. By mid‑March, however, conditions began to shift, particularly in the U.S. and Europe, as geopolitical tensions picked up, credit concerns weighed on private asset valuations, and commodity markets experienced unusually high volatility. Together, these changes introduced more uncertainty and divergence across markets, creating the kind of environment in which short sellers typically find greater opportunities to generate profits.

European equity markets started 2026 strong, helped by better growth, interest‑rate cuts from the ECB, and higher spending on defence, infrastructure, and energy security. Even though markets were rising, short sellers of the constituents of the MSCI Europe index still improved their results, with P&L moving from paper losses of -$6.03bn at the start of the year to profits of $3.12bn by March 19.

Lower rates helped some stocks, especially in rate‑sensitive and cyclical sectors, but not all companies benefitted from this dynamic equally. Price movements suggest that investors focused more on balance‑sheet strength, pricing power, and exposure to energy costs as geopolitics kept inflation uncertain heading into March.

Defence and infrastructure stocks in the MSCI Europe index often rallied sharply, but that pushed money away from crowded defensive stocks or highly leveraged “bond‑like” stocks in the index, creating opportunities for profitable short positions.

The MSCI Europe’s biggest short‑selling profits over the period came from the London Stock Exchange Group (LSEG) (+$9.31bn), Telefonica (TEF) (+$4.90bn), and Universal Music Group (UMG) (+$4.57bn).

Conversely, short sellers lost money in other constituents of the index such as Equinor (EQNR) (-$19.58bn), Eni (ENI) (-$12.82bn), and Maersk (MAERSK B) (-$13.79bn) as rising tensions in the Middle East and shipping disruptions periodically pushed up energy and freight expectations, hurting existing short positions in the companies most exposed to these geopolitical shocks.

Overall, the MSCI Europe index delivered gains for short sellers because the market was not simply “risk on.” Market conditions in the region created a mix of winners and losers shaped by interest rates, government spending, and energy‑related geopolitical risks.

MSCI AC Asia Pacific ex Japan: a more challenging environment for short sellers

The constituents of the MSCI AC Asia Pacific ex Japan index provided the weakest profits for short sellers during the period. Paper losses continued to appear throughout the period, moving from ‑$1.87bn on January 1 to ‑$4.26bn by March 19, even though there was a rebound from the ‑$12.01bn paper loss registered on March 2. This fits the mixed but improving market backdrop seen across the region which was largely due to the stabilisation seen in the growth of the Chinese economy and more supportive conditions for Emerging Market economies that supported sharp rallies in share prices, even while longer‑term stock specific concerns persisted.

Short sellers made money from several constituents of the MSCI AC Asia Pacific ex Japan index where prices fell sharply during the period. The biggest profits came from WiseTech Global (WTC) (+$13.17bn), Xiaomi (1810) (+$9.73bn), and Meituan (3690) (+$7.20bn). These gains reflect selective weakness in software, platform, and consumer‑technology stocks, where valuations corrected after a period of prolonged strength.

Further profits came from Novatek Microelectronics (3034) (+$6.04bn), showing that even within the semiconductor sector, not all stocks moved higher and some experienced meaningful pullbacks.

On the other hand, short sellers suffered large paper losses in several constituents where their prices rose sharply during the period. The biggest losses were in Ping An (2318) (‑$59.02bn) and Samsung (005930) (‑$48.60bn). These large, influential companies rallied as government policy support and positive global technology sentiment increased.

Additional losses came from AI‑linked semiconductor names held within the index. SK Hynix (000660) (‑$23.88bn) and Hanmi Semiconductor (042700) (‑$14.03bn) stock prices surged as expectations for investment spending and demand improved, squeezing existing shorts.

Short sellers also struggled to turn a profit in materials and energy stocks held within the index. Rio Tinto (RIO) (‑$28.07bn) and Zijin Mining (2899) (‑$27.19bn) share prices rose following spikes in commodity and precious‑metal prices, while Woodside Energy’s share price (WDS) (‑$9.17bn) advanced amid energy volatility and geopolitical tensions, further working against the profitability of short positions in these stocks.

How short‑interest P&L is typically estimated

Estimating profit and loss on short positions most often relies on a combination of share‑price movements and changes in aggregate short interest, using public disclosures or other widely available datasets. This approach has become standard practice largely because the full lifecycle of individual short positions is not observable using public data alone.

While this methodology can provide a broad directional signal, it necessarily relies on assumptions and inference, rather than observing how and when short positions were actually established, adjusted, or closed.

Why S&P Global Market Intelligence data represents a step‑change in accuracy

S&P Global Market Intelligence’s transaction‑level short interest data fundamentally changes what is possible. By capturing position‑level activity, including when shorts are opened, adjusted, and closed, the data allows investors to calculate short‑side P&L with a far higher degree of precision and confidence.

Access to this granular dataset enables market participants to:

Calculate P&L from true entry points: Each short position is marked from its actual initiation date and execution price, rather than relying on a hypothetical or “average” short. This significantly improves accuracy at both the security and index level.

Differentiate new shorts from short covering: Investors can clearly see whether short interest changes reflect profit‑taking, loss‑cutting, or fresh positioning, rather than conflating distinct behaviours into a single aggregate figure.

Enhance short‑squeeze risk management: Squeeze risk is driven not only by the size of short interest, but by who is short, at what price, and for how long. Understanding the age and cost‑basis of the short base provides direct insight into pressure points where forced covering is more likely to accelerate.

In fast‑moving markets, this depth of insight is critical.

Why this matters for investors

How short‑interest P&L is measured has direct implications for performance attribution, portfolio construction, and risk management. Public data can reveal high‑level trends, but it misses the mechanics that drive real outcomes, namely position timing, turnover, and cost basis.

By contrast, S&P Global Market Intelligence’s transaction‑level approach provides a clearer, more faithful view of market‑wide short‑side activity, while enabling investors to:

• Accurately assess long/short P&L dynamics
• Identify where profits are being crystallized versus rolled forward
• Detect mounting squeeze risk before it becomes disorderly

In short, better data leads to better decisions, particularly in environments where positioning, liquidity, and crowding increasingly drive returns.

The information provided herein is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results.