ASX Bank Stocks

About this theme

Australian bank shorting is a housing and net-interest-margin trade wearing a financials label. Roughly two thirds of major bank lending is residential mortgages, so the bear case attaches to arrears, to deposit competition compressing margins, and to the point in the cycle when provisions written back during good years have to be rebuilt. Valuation is a second, separate thesis: the largest banks have traded at multiples of book value well above global peers, which invites relative-value positions that are long one bank and short another rather than short the sector outright. That pairing is why the regionals often show higher percentage short interest than the majors despite far smaller balance sheets. Franking-driven demand from domestic income investors sits on the other side, which keeps a persistent bid under these registers and makes crowded positions expensive to hold through dividend dates.

Short positions come from official ASIC short position reports (published with a T+4 trading-day delay) joined with daily price and volume data. The chart averages the constituents reporting in each week and shades the range between the least and most shorted of them; a member with no data that week is absent from the average rather than counted as zero.