[QODLink]
Europe
Short-selling explained
Analyst Aly-Khan Satchu explains how short-selling works after a ban on the practice by several countries.
Last Modified: 12 Aug 2011 16:42

Following days of volatile activity, European markets rose today after France, Italy, Spain and Belgium imposed a temporary ban on the short-selling of financial shares.

Investors who participate in short-selling borrow shares from other investors and sell them at current market prices.

When the value of those shares drop, they buy them back at the new, lower price and return the shares to their original owners.

Their profit is the difference between the price they sold the shares and the price they bought them back, minus lender fees. In essence, the goal of short-selling is to profit from the falling price of a share.

Market analyst Aly-Khan Satchu explains to Al Jazeera's Tony Harris why short-selling can cause market problems.

Source:
Al Jazeera
Topics in this article
People
Country
Featured on Al Jazeera
As Western stars re-release 1980s charity hit, many Africans say it's a demeaning relic that can do more harm than good.
At least 25 tax collectors have been killed since 2012 in Mogadishu, a city awash in weapons and abject poverty.
Tokyo government claims its homeless population has hit a record low, but analysts - and the homeless - beg to differ.
3D printers can cheaply construct homes and could soon be deployed to help victims of catastrophe rebuild their lives.
Featured
Pro-Russia leaders' election in Ukraine's east shows bloody conflict is far from a peaceful resolution.
Critics challenge Canberra's move to refuse visas for West Africans in Ebola-besieged countries.
A key issue for Hispanics is the estimated 11.3 million immigrants in the US without papers who face deportation.
In 1970, only two mosques existed in the country, but now more than 200 offer sanctuary to Japan's Muslims.
Hundreds of the country's reporters eke out a living by finding news - then burying it for a price.