Short Selling in Finnish Stock market
Tilli, Patrik (2022)
2022
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2022052712456
https://urn.fi/URN:NBN:fi:amk-2022052712456
Tiivistelmä
Short selling is a notorious investment method which has been used since the Dutch East India Company in 1609. It’s a method where the investor borrows specific shares and sells them back to the market, only to buy them back when the value has been decreased, gaining a profit when the stock’s value sinks.
Short selling raises ethical and moral questions and has been a target for regulations since 1938. Laypeople often see it as immoral and almost pure evil. It’s often connected to market volatility and other negative contributions. However, short selling actually keeps the markets efficient and increases liquidity.
The goal of this thesis was to gain a better understanding of short selling and how it affects the Finnish stock market. Qualitative research methods were used in the making of this thesis. The author used Internet and library, to gain information from literature, studies and articles.
On the empirical results, the author used historical data from the Financial Supervision Authority. They publish short positions that have reached or exceed the threshold of 0,5% of the company’s issued share capital, as well as the position at the time when the position previously exceeded 0,5% has fallen below that threshold.
After the data was filtered, the author analysed the findings and came into the conclusion that short selling has been increasing during 2012 – 2022 in the Finnish stock market. The author found out, that as the OMXH25 markets prices increased, a similar pattern was shown in Net short positions on Finnish stock market. There are also clear increases on Net short positions when COVID-19 pandemic started.
Short selling raises ethical and moral questions and has been a target for regulations since 1938. Laypeople often see it as immoral and almost pure evil. It’s often connected to market volatility and other negative contributions. However, short selling actually keeps the markets efficient and increases liquidity.
The goal of this thesis was to gain a better understanding of short selling and how it affects the Finnish stock market. Qualitative research methods were used in the making of this thesis. The author used Internet and library, to gain information from literature, studies and articles.
On the empirical results, the author used historical data from the Financial Supervision Authority. They publish short positions that have reached or exceed the threshold of 0,5% of the company’s issued share capital, as well as the position at the time when the position previously exceeded 0,5% has fallen below that threshold.
After the data was filtered, the author analysed the findings and came into the conclusion that short selling has been increasing during 2012 – 2022 in the Finnish stock market. The author found out, that as the OMXH25 markets prices increased, a similar pattern was shown in Net short positions on Finnish stock market. There are also clear increases on Net short positions when COVID-19 pandemic started.