Hedge funds nurse losses on bets against Greek, Italian shares

Some hedge funds that bet against a series of Greek and Italian companies are nursing losses after the European Union's breakthrough plan for a 750 billion euro (£673 billion) recovery fund sent stock markets surging across southern Europe.

The funds, which include Citadel, Marshall Wace and AKO Capital, still hold short positions on companies such as Italy's Banco BPM and Greece's Piraeus Bank ahead of a June 18-19 EU summit to debate the recovery fund, aimed at helping European economies recover from the impact of the coronavirus pandemic.

Essentially a bet that the price will fall, shorting involves borrowing shares then selling them in expectation of being able to buy them back cheaper and pocket the difference.

Early last month, shorting Italian and Greek shares may have seemed like a no-brainer; heavily dependent on tourism, their economies are expected...