Bespoke Investment Group Analysis
"Without the 7 Big Tech, S&P 500 Negative"
Despite the rally in US big tech stocks, the number of investors betting on a decline in the Standard & Poor's (S&P) 500 index has significantly increased this year.
On the 4th (local time), the Wall Street Journal (WSJ) reported, citing investment information firm Bespoke Investment Group, that the proportion of short positions on the S&P 500 held by investors including hedge funds is at its highest level since 2007.
Although the S&P 500 has risen 12% so far this year, the media reported that it would have recorded a negative return if the seven major big tech companies' stock prices had not increased.
In fact, the top 10 companies in the S&P 500 saw their stock prices rise 8.9% last month. In contrast, the remaining 490 companies' stock prices fell by 4.3%. Despite the poor performance of most companies, the S&P 500 index rose 0.2% last month, buoyed by the gains in the top 10 companies' stock prices.
The WSJ analyzed, "After a sharp decline last year, tech stocks have returned to a familiar position near the top of the market," adding, "The surge in interest in generative artificial intelligence (AI) technology has had some impact."
However, the total short-selling volume on current S&P 500 stocks has increased to $487 billion (approximately 638 trillion KRW). Short selling on big tech companies has also surged. As of last month, the short-selling amount on Tesla was $3.57 billion (4.7 trillion KRW), while short selling on semiconductor company Nvidia and Meta, the parent company of Facebook, increased by $2.5 billion (3.3 trillion KRW) and $7.26 billion (9.5 trillion KRW), respectively.
However, since these stocks surged sharply last month, short-selling investors have been exposed to significant losses. In particular, Nvidia's stock price has tripled this year and last week entered the '1 trillion dollar (1,310 trillion KRW) club' in market capitalization.
Aliki Lupiak, a portfolio manager at asset management firm Robeco, analyzed, "The current stock market is not moving according to corporate fundamentals," adding, "It is really difficult and challenging to navigate the market."
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