SHARES: What's Short On The ASX?

*Graphite environment not getting any better for Syrah Resources
*Bank of Queensland capital raising weighs on stock price
*Costa group short sell ratio gains 3.1% as of Nov 21

ASX reaches the summit 

ASX 200 officially set new all-time highs after brushing 6,879.5 in early trading. The move, however, was short-lived with the index back at 6,685 and market sentiment in slow retreat after Trump signed the highly controversial HK decree. As US tactfully walk into Thanksgiving, lower participation and hence lighter liquidity have probably subdued the negative impact from the news somewhat. Lower volumes in addition to volatility being at lower bounds makes us cautious that there could be some exhaustion at these altitudes and that near-term retracement is a medium possibility. We obviously also consider lower rate cut expectations in the medium-term and note them as supportive macro factors going forward. 

Overall though, we believe this is an opportune time to think about what's short on the ASX and where clients might be buildiing short bets. See table below. 

Why are these stocks under pressure?

Bank of Queensland (BOQ). Recently announced a A$275m capital raising comprised of a A$250m institutional share placement and A$25m share purchase plan. Morgans cut its BOQ price target to A$7.20 from A$8.0. Forward economics don't look great with loan book squeezed, next dividend likely to see another cut and EPS trending lower. In light of the negative, an annual dividend yield of 11.15% (likely to see some downward pressure) could see the stock supported above A$7.0.

Syrah Resources (SYR). Share price is at multi-year lows. Flake graphite prices have experienced a sudden and material drop. Considered a loss-making business for the time being.

ASX short leader board (as of Nov 21, 2019)

From our coverage of what's short on the ASX, there were no major changes to the leader board. Syrah Resources (SYR) still holds the mantle for the ASX's most shorted stock with Galaxy Resources a close second (GXY). We've previously spoken about Costa Group (CGC) in SHARES: Is Costa Group Due For A Rebound whose short sell ratio increased to 12.4%.     

Top 20 most shorted ASX stocks. Short sell ratio % = short sell volume/issued capital. Change from prior week refers to the change in short sell ratio (green = less short, red = more short). Previous rank (green = good, red = moved up rankings on short list). Source: ThinkMarkets, Eikon