EWU, the iShares MSCI United Kingdom ETF, has become one of the more aggressively repositioned country funds in recent weeks. Short interest has more than quadrupled in a month. The ORTEX short score has nearly doubled in five trading days. And yet the price is barely moved — a tension that makes the borrow market the most interesting part of this story right now.
The short build has been abrupt and large. Estimated short interest climbed to 19.6% of free float as of June 2, up from roughly 4.6% just six weeks ago and from just 3.1 million shares on April 22. That represents a near-fourfold increase in one month and a 225% jump in the past week alone. The ORTEX short score tells the same story with more precision: it was running in the high-30s through most of May, then jumped sharply to 35.9 on May 28, 41.9 on May 26, and has continued climbing to reach 69.8 by June 2 — a level that puts it well into elevated-conviction territory. Most of that acceleration happened in three trading days around May 28-29, when short positions roughly tripled from 2.6 million to 10.8 million shares.
The borrow market has tightened significantly as a result, though it has not yet become a constraint. Availability — the ratio of shares still available to borrow relative to shares already borrowed — has collapsed from above 1,200% through most of May to 134.5% today. For context, the 52-week minimum was previously 127.4%, so EWU is now testing the tightest borrow conditions of the past year. The cost to borrow has risen in step, reaching 4.42% annualised — up 44% on the week and 79% on the month. That is not a punishing rate by ETF standards, but the trend is unambiguous. If short interest continues to build from here, availability will fall below 100%, meaning the lending pool no longer covers the outstanding short position — a qualitatively different environment.
The macro backdrop for UK equities provides obvious context. CNBC has been flagging UK-specific volatility across recent sessions: elevated gilt yields, rising unemployment, sterling weakness, and political pressure on the Starmer government around borrowing plans. The FT notes that Andy Burnham — Labour leadership frontrunner — has postponed discussions with City investors amid unease about UK borrowing. None of this is hidden risk; it is the kind of regime where tactical shorts against a broad UK index make straightforward sense as a hedge. Options data adds a softer signal. The put/call ratio is running at 4.22 against a 20-day average of 4.18 — structurally elevated but not spiking — suggesting that the put-heavy positioning in EWU options has been a persistent feature rather than a new development this week.
Institutional ownership provides some counterweight to the bearish short build. BlackRock — as creator and primary market-maker of the fund — remains the largest reported holder with 18.3% of shares, and added 6.7 million shares as of its April 30 filing. RBC Rochdale and Wells Fargo hold smaller but meaningful positions. Jane Street, the ETF market-making firm, added 1.4 million shares in the March quarter. The presence of these names does not constrain shorts, but it does reflect genuine buy-side demand for UK equity exposure that has absorbed the selling pressure implied by the short build.
What to watch: whether borrow availability drops through 100% — the point at which the lending pool is fully committed — and whether the cost to borrow accelerates beyond its current moderate level, since those two signals together would indicate that the short build is running into genuine friction rather than executing at scale with ease.
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