The cost to borrow Alibaba shares has varied widely in the days since the IPO.
On Thursday, for instance, annual borrowing costs started the day in the 25 percent region, but plunged soon afterward, now registering just 0.2 percent, according to Karl Loomes, market analyst at SunGard’s Astec Analytics. That is about the same as to borrow IBM or Ford Motor Co shares.
The cost to borrow the average stock for shorting typically is negligible unless the stock is listed as hard to borrow.
“Though this is fairly low for the first days of securities lending following such a highly publicized IPO, it is probably mostly on the back of such high availability of stock to borrow rather than signifying a lack of demand,” Loomes said.
Some 368 million shares were sold in the IPO, following the exercise of over-allotment options by the deal’s underwriters. (Reuters)
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