Why investors are betting against the big four banks | The Business | ABC NEWS

Recent data from the corporate regulator shows an army of investors going up against the banks and shorting them.
Shorting is another word for selling, and it means investors are betting the big four bank stocks - Commonwealth Bank, NAB, ANZ and Westpac - could soon drop sharply in price. Short positions in the banks, according to the financial regulator, have doubled over the past six months to $11 billion. Salt Financial Group managing director Steve Landers says there are a few reasons why investors would be shorting banks. One is valuation. All of Australia's banks, but CBA in particular, have very high valuations compared to other global banks. While that's been the case for around 12 months, Australia's economic situation has changed in that time. "We've now got some sticky inflation and worldwide turbulence, as well as higher interest rates, so that puts a lot of pressure on borrowers. We've got housing prices coming off, so people need to borrow less, and so that's sort of playing into that credit growth ... So a few things are sort of going down that path where the banks look like the earnings are going to be impacted, and that's then going to flow on to dividends, it's going to compress their multiples at the same time."
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