Amid pandemonium on Frankfurt's stock exchange, VW shares experienced a rollercoaster ride before ending 82% higher on the day at €945, valuing the group at €280bn.
The panic-buying, which began on Monday, came after hedge funds were caught short by Sunday's announcement from the luxury car-maker Porsche that it had seized 74.1% of VW.
With the federal state of Lower Saxony holding a further 20.2% in VW, that left just 5.7% of the firm's shares traded freely. With global car companies in freefall as the recession bites into sales and profits, the funds [had previously] bet hugely on VW's stock falling dramatically. In market parlance, they "shorted" VW shares by "borrowing" and then selling them in the hope they could buy them back at a much reduced price.
Porsche's announcement forced them to close their positions by chasing the few shares on offer and paying ever-higher prices for them.
It's a hard world and getting harder all the time.
No comments:
Post a Comment