EIS, the iShares MSCI Israel ETF, heads into the week with short sellers retreating at a meaningful pace — and a borrow market that has opened up significantly behind them.
The most striking data point is the pace of short covering. Short interest has fallen 18% over the past week alone and is now down a third from levels seen in mid-August, settling at 2.7% of the free float. That decline is not a gentle drift — it is a sustained unwind that began in early September after shorts peaked near the 200,000-share mark around August 10. The ORTEX short score, a composite measure of short-side pressure, reflects the easing: it has slipped from roughly 39.8 to 38.3 over the past two weeks, pointing toward a less charged positioning environment.
The borrow market tells the same story. Availability has loosened considerably — with over 1.1 million shares available against a short base of just 133,000, the lending pool is running at roughly 642% of estimated short interest. That is a deep, comfortable level of supply. Borrowing costs have also fallen sharply this week, dropping to 0.33% from 0.57% just a day earlier, and are now at their cheapest level in the 30-day window visible in the data. A month ago costs were running closer to 0.70–0.78%. The direction is unambiguous: the cost and friction of shorting this ETF has eased materially, even as fewer participants are choosing to do it.
The price action gives some context for the short covering. EIS closed at $122.62 on Tuesday, off 2.2% on the week and down about 1.7% over the past month. The ETF tracks Israeli equities — a market that remains sensitive to geopolitical developments in the region — and the mild but persistent price softness may itself be enough to encourage short exits rather than fresh entries. There are no analyst targets or valuation multiples applicable to an ETF wrapper, so the geopolitical and macro backdrop for Israeli equities is the primary driver of sentiment rather than any bottom-up corporate catalyst.
On the ownership side, Korea Investment Corporation is the single largest disclosed holder at just under 19% of shares, a position that was unchanged as of the June 30 filing date. Morgan Stanley added roughly 23,000 shares in the same period. Jane Street, the market-making firm, trimmed by over 346,000 shares — a large move in percentage terms, though market makers routinely adjust ETF positions for hedging and creation/redemption purposes rather than directional conviction.
The 52-week range for availability sits between roughly 57% (the tightest it has been) and today's 642% — so the borrow market is effectively at the loose end of its annual range even as short interest has unwound. The combination of a shrinking short base, low and falling borrowing costs, and abundant share availability describes a market that has already priced out much of the bearish positioning that built through the summer. What to watch from here is whether the price softness in Israeli equities accelerates any renewed short-building — or whether the continued unwind of summer shorts leaves the fund trading on pure macro and geopolitical flows alone.
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