Kakao Records Highest Weekly Short Selling... "Regulatory Concerns at Play"

Kakao Short Selling Increased by 607% Compared to Previous Week
Kakao Stock Price Drops Over 15% Amid Regulatory Concerns
Individuals Accumulate Over 1 Trillion Won in Kakao Shares

[Asia Economy Reporter Minji Lee] Over the past week, Kakao recorded the highest short-selling trading value among domestic stock market stocks.

According to the Korea Exchange on the 12th, from September 6 to 10, Kakao's short-selling trading amount was 259.4 billion KRW, the highest among companies listed on the KOSPI and KOSDAQ markets. This represents an 807% increase compared to the previous week (August 30 to September 3, 28.6 billion KRW).

In particular, on the 8th, 175.9 billion KRW was traded, marking the largest daily short-selling amount for a single stock since short-selling resumed in May. Kakao was designated as a short-selling overheated stock, and short-selling was banned for one day on the following day, the 9th. Short-selling refers to selling stocks without owning them, aiming to profit from a decline in stock prices.

Recently, as financial authorities, the Fair Trade Commission, and political circles have consecutively raised the need for regulation on large online platforms, Kakao's stock price sharply declined, which is interpreted as investors increasing short-selling on Kakao. Earlier, on the 7th, financial authorities issued repeated warnings, stating that the existing financial product comparison and recommendation services of online financial platforms may violate the Financial Consumer Protection Act (FCPA), and threatened strict action if illegalities were not corrected.

In the top ranks of short-selling trading amounts over the past three weeks were Samsung Electronics (343.6 billion KRW), Kakao (329.2 billion KRW), NCSoft (291.4 billion KRW), and LG Chem (251.8 billion KRW), mostly large-cap stocks showing weak stock prices due to individual issues. For NCSoft, the short-selling ratio to total trading volume during this period was 6.7%, higher than Samsung Electronics (1.9%), Kakao (3.5%), and LG Chem (4.1%). The poor performance of the new game 'Blade & Soul 2' (Bladeso2) is expected to significantly impact future earnings and corporate value, leading to increased short-selling.

Meanwhile, individual investors have been buying up over 1 trillion KRW worth of Kakao shares. Over three days (September 8 to 10), during which Kakao's stock price fell 15.58%, individual investors net purchased 1.0411 trillion KRW worth of Kakao shares. Especially on the 8th, when the stock price plunged 10% compared to the previous day, individual net purchases reached 626.2 billion KRW, the largest daily net purchase amount by individuals for Kakao ever recorded.

Foreigners and institutions net sold 749.8 billion KRW and 292.9 billion KRW worth of shares respectively over the three days from the 8th, but individuals absorbed these sales entirely. It is interpreted that individuals took the sharp price drop caused by regulatory discussions targeting large online platforms as a buying opportunity at a low price.

The securities industry is optimistic about Kakao's stock price recovery. Suhyun Kim, a researcher at Shinhan Financial Investment, said, "It is necessary to observe further whether this is a temporary adjustment in regulatory intensity or a long-term trend," adding, "Although this is not good news related to KakaoPay, which is preparing for listing, in the long run, Kakao is advantageous in regulatory tightening phases and in defending against resistance from the financial sector as it holds licenses for banking, securities, and non-life insurance."

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