I don't know whether its specifically Ausbill here or not, but I do know from investigations done years ago elsewhere that Australian super companies have been held responsible for being primary lenders to shorters rather than shorters themselves (other than relatively short term and "genuine" as part of trading), as have brokers running margin lending accounts. This came out in one of the numerous court cases over the years if I am recalling correctly.
The super entity reporting rules facilitate it as they have special arrangements for reporting debt and liabilities as no super fund would be solvent if they had to report under normal corporate accounting rules for recognition of assets and liabilities.
I would judge it quite likely that they are significant lenders, but they will also happily be the reverse as long as they are making a return on the shares. If shares a paying dividends, or rising they are less likely to lend them, if shares are flat or falling they are highly likely to lend since they have to make a payable income on funds. Margin account operators have significant incentives to lend for shorting in either case as the margin calls reduce the loan risk and they aren't lending shares they own rather than shares they hold on behalf of a third party. At least that is the way it was year's ago. I don't know if the rules have changed since, but I doubt it.
Now as far as the Chinese thing is concerned, both could be true as one party is being accused of being the lender while another party is being accused of funding the borrowing. In either case for it to work there has to be an external influence to make a sector wide attack work, and in this case it has been the falling Spod pricing (or the banks forecasting thereof) which has made it possible for there to be less demand at any given price for buying the shares than there is supply of borrowed shares to sell.
In the absence of the shorters would the shares have come down by as much? Probably, well almost definitely, not, and I think it is that that is peeving the long term holders - as well as all the after-the-fact justification, slanted arguments and grand standing of those running the shorts here. For the whole thing to work, those arguing the fall have to shorten the investment horizon of the shareholders/public to being 12 months or so, while normally it is argued that companies are valued on multi-year revenue streams so the default investment horzon for an assumed investor is several years. Thus what is going to happen within the next year becomes moreimportant than what is going to happen over the next three years or more.
There are plenty of other ASX companies in far worse fundamental shape than GXY over the next year's expectations that are in fact rising in the market, eg APT.
Personally I suspect Chinese takeovers are probably more opportunistic than well planned, and that the opportunity has been brought on as much by Chinese economic woes arising from the protracted trade dispute as the fact that Australian's are really, really good at mining (I think we are the dwarves of the real world) and outpaced the Chinese ability to expand production, combined with the protracted changeover from LiCO3 dependent batteries (where lower grade Li resources are usable, and brine has a cost advantage) to the more quality sensitive LiOH dependent batteries (where lower grade Li resources are more problematic and brine has a cost disadvantage), combined with the point in the EV / Battery storage industry cycle we are at where supply chains are growing erratically without being synchronised and prices at each point are still finding their optimum levels. The trade dispute is also really hammering Chinese access to US currency which is needed to purchase spod and invest outside of the US.
In my experience the only conspiracy that tends to be well coordinated and sustainable is corruption because all players have an incentive to work within the corruption structure, whereas market collusion (without the payoff component) and power collusion is very hard to hold together as a long term conspiracy, as working outside of the structure to bypass it offers extraordinary gains, where as working outside the corruption structures leaves you unable to deliver as a corruption participant, but never-the-less if successful just gets incorporated into the system as one more branch of corruption in the system. So I suspect that the take-over based motives are less likely to be the cause than a response to an opportunity, at least when we are looking at a sector wide play. I am happy to be corrected on this.
I suspect the Chinese reduced demand is more to do with the plant upgrades all being done at once - partly because they had to be done like that to sink with the Government mandated shift to higher mileage cars - thus higher grade batteries (which is a direct consequence of a controlled economy) and directions to bias toward lower grade local Li resources to take up the backlog and buffer the economy during a trade dispute, but both are short term as the emerging demand is for higher quality LiOH capable Li resources, which puts it all firmly back in Oz hands to supply in the coming year.
We will very soon be able to see if this is right, or not.
Expand
