The reaction rekindles memories of the chaotic days after the September 2008 collapse of Lehman Brothers.

Stocks on Wall Street continued to come under pressure, led by financial and technology companies, amid reports that Germany is banning certain types of bearish investments.

The reports said Germany would ban naked short-selling of stocks and bonds, which differs from normal short selling in that the sold secutities aren't borrowed in advance.

The practice came under fire at the height of Greece's struggle to refinance its debt, with many euro-zone governments saying such transactions in credit-default swaps artificially inflated funding costs.

Air New Zealand’s operations may not have been greatly affected by the shutdown of European air traffic last month but many investors have bet on it hitting the share price, with short trading in the stock increasing by 2494% in April.

Air New Zealand was easily the most actively shorted stock on the New Zealand share market last month, according to the NZX Short Sale Report for April.

There were a total of $1.3 million worth of short sales in Air NZ last month, compared to $51,258 the previous month.

Traders will be watching the ASX-listed financial stocks with interest today after the Australian stock exchange regulator lifted its ban on covered short selling this morning.

The Australian Securities and Investments Commission put the ban in place last September, in the days following the collapse of Lehman Brothers.

It originally covered all stocks but was restricted to just financial stocks in November.

Australia is one of the only markets in the world continuing to outlaw the short selling of financial stocks after its regulator decided today to extend the ban.

The Australian Securities and Investment Commission has extended its covered short-selling ban to May 31, despite similar restrictions being lifted in the US in October and the UK on January 16.

ASIC had earlier extended its ban from January 21 to tomorrow on fears that Australian financial stocks might be targeted once the restriction ended.

Pity the poor executives who have now been blocked from hedging their share option bonuses, and are stuck with portfolios that are bleeding red ink.

The short selling ban means that senior staffers all over the investment banking world, who have truckloads of shares and options issued by their employers as bonuses, are stuck in a long position without the ability to, say, sell CFDs to ensure at least some profit when the share price tanks, as they have been recently.