Gamestop affair in the US pushes up European stocks

Gamestop affair in the US pushes up European stocks
Gamestop affair in the US pushes up European stocks

In a Parisian market that fell 1.81%, the two real estate companies Klepierre and Unibail-Rodamco-Westfield took off by more than 15%.

Several European companies subject to downward stock market bets saw their prices rise on Wednesday, an indirect consequence of extremely brutal movements around the Gamestop share in the United States, the subject of a pitched battle between professional and private investors.

In France, the movement was mainly visible on the two real estate companies Klepierre and Unibail-Rodamco-Westfield, which took 16.03% and 15.94% respectively, for no apparent reason, and in a market that fell by 1.81% around 4:15 p.m. (15:15 GMT).

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The most visible are these”, confirms Alexandre Baradez, head of market analysis at IG France, recalling that these two French companies appear in the ranking of the ten most “shorted” European companies in the stock market index. EuroStoxx 600.

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The practice of “short selling” is for an investor to borrow a stock, sell it at a generally high price and then wait for it to fall, to buy it back much cheaper before returning it. He then pockets the difference between the price at which he sold the security, and the price at which he buys it. But if the price goes up sharply, the investor can get trapped.

This is what has unfolded on Gamestop stock in recent days on Wall Street, following a pitched battle between professional investors, betting down on the stock, and retail investors betting their side massively on the rise, and coordinating via social networks.

As a result, the company’s stock price has soared nearly 700% since January 1, knocking down investors such as American financier and speculator Andrew Left of Citron Research and investment fund Melvin Capital, now in great financial difficulty according to the Wall Street Journal.

According to several analysts in recent days, many investors may have been forced to buy the stock to limit the risk of loss, which has led to a massive increase in the value of the share.

In Europe “it is much less spectacular, but these are movements that we observe”, says Alexandre Baradez, in a kind of mimicry effect.

A similar movement was observed in the price of the German biotech company Evotec, which had taken 17% since Monday, as market rumors evoked the end of downward bets on this title by Melvin Capital.

Across the Rhine, the price of Varta has also increased by 21% since the start of the week.

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The movement is much less brutal than in the United States: the American chain of cinemas AMC, also subject to many downward bets, for example saw its stock price take 300% shortly after the opening of Wall Street on Wednesday.

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