Goldman report: Hedge funds short financial stocks such as banks, sell mainly in North America

Intelligible Finance learned that Goldman wrote in a report that hedge funds continued to short bank and other financial stocks in the week ended Friday, as reports of Wall Street banks cutting jobs and reducing investment banking trades emerged. The report said that financial stocks closed last week as the biggest net sell-off for Goldman's institutional brokerage division, which serves global hedge funds.

The report said the selling was global, nominally led by developed markets in North America, Asia and Europe. The Stoxx 600 European bank index has risen 1.7 per cent since Aug. 26, while the Dow Jones bank index rose more than 2 per cent last week.

Financial stocks have been sold for six of the past seven weeks, according to the Goldman report. Banks, insurers, publicly traded real estate investment trusts and capital markets companies that allow people to buy and sell bonds and stocks have all suffered net sell-offs for four consecutive weeks.

Data from LSEG showed that while overall investment banking trades grew by about a fifth, the number of mergers and acquisitions fell 25 per cent in the year to June 25.

However, the Goldman report said hedge funds had made modest net purchases in consumer finance.