Korean Version of 'GameStop'?… Retail Investors Gather at Hantuyeon, Announcing 'War Against Short Selling'

Celltrion Forms Alliance with HL Biopharma Shareholders... Likely to Launch Collective Buy Like US GameStop

The Korea Stock Investors Union (KOSIU), a private investors' group, announced on the 1st that it will operate buses displaying phrases such as "Abolish Short Selling" and "Dissolve the Financial Services Commission" around Yeouido and Gwanghwamun in Seoul until March 5th to promote its campaign against short selling.
[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] Domestic individual investors have declared war against short selling. They are demanding the abolition of the short selling system, which involves borrowing stocks to sell and then repurchasing them after a price drop to return the borrowed shares. At the same time, individual investors of stocks such as Celltrion and HL Biopharma are uniting to oppose short selling forces. Attention is focused on whether the 'GameStop' phenomenon, where hedge funds suffered huge losses due to collective stock buying by individual investors in the U.S., will occur domestically as well.

The Korea Stock Investors Union (hereafter KSIU) issued a statement on the 1st announcing their intention to launch a movement against short selling. The purpose is to rectify the harms caused by short selling and protect the rights of 7 million stock investors in Korea.

They first argued that the ban on short selling, scheduled to be lifted on March 15, should be extended for one year. KSIU stated, "Talking about resuming short selling before perfect institutional improvements that can fundamentally eradicate illegal short selling are made is like urging people to board a ship before repairing the holes in a sinking ship," adding, "Only short selling investors wear life jackets; who will live and who will die?"

They demanded the introduction of a 100% computerized, flawless, no-borrow short selling detection system before the resumption of short selling. They also emphasized that illegal activities should be detected daily in real-time, not on the existing one-month cycle.

They urged disclosure of the profits of short selling entities. They explained that after investigating and comparing the profits of major countries' and Korea's short selling entities over 5 or 10 years, the decision on whether to maintain the system should be made through social discussion.

If short selling resumes on March 16, they announced plans to launch large-scale solidarity activities similar to those of U.S. GameStop individual shareholders. KSIU said, "First, we will unite with shareholders of Celltrion and HL Biopharma, which have the highest short selling ratios on the Exchange and KOSDAQ, and lead support from Donghak Ants to induce short selling liquidation. Furthermore, we will ally with U.S. individual investors such as Robinhood," adding, "To this end, we will form K-StreetBets (KSB), modeled after the U.S. online community Reddit's 'WallStreetBets,' and use it as a focal point for individual shareholder responses."

Previously, individual investors gathered on WallStreetBets bought GameStop stocks to oppose short selling hedge funds. As a result, GameStop's stock price rose about 1500% this year. As of the 29th of last month (local time), it recorded $325, up 67.87% from the previous day. With such a surge in stock price, hedge funds that must repurchase borrowed stocks are inevitably facing huge losses. According to major foreign media, Melvin Capital, a hedge fund that fought a 'short selling war' with individual investors, has already suffered losses amounting to $3.75 billion (approximately 4.1943 trillion KRW).

Jung Eui-jung, head of KSIU, said, "We will properly correct the injustices of the capital market that have been perpetrated for a long time through this opportunity," adding, "If shareholders of Celltrion and HL Biopharma unite under KSIU's leadership, it will effectively bring together one million Donghak Ants, and as shareholders of companies heavily affected by short selling join in, there will be no shortage in fighting short selling forces."

This content was produced with the assistance of AI translation services.