The "Short Selling Nightmare" Strikes Celltrion Again

[Asia Economy Reporter Ji Yeon-jin] Celltrion has once again faced the 'short selling nightmare.' As the KOSPI plunged below the 3000 mark and a bear market unfolded, short selling transactions on Celltrion surged.

On the 6th, the Korea Exchange designated Celltrion, Chong Kun Dang, Studio Dragon, and others as short selling overheated stocks, suspending short selling transactions for the day. Short selling overheated stocks are designated when the short selling transaction amount significantly increases and the stock price sharply declines. Celltrion's stock price fell 12.10% the previous day, and the short selling transaction amount reached 45.7 billion KRW, more than eight times the recent 40-day average. Although short selling was concentrated on biotech stocks during the first week of May when short selling resumed, this is the first time Celltrion has been designated as an overheated stock.

The previous day's short selling transaction amount in the KOSPI market was 696.9 billion KRW, the largest scale of short selling except for May when short selling was partially resumed. Samsung Electronics had the highest amount at 104 billion KRW, with Celltrion ranking second.

The drop in Celltrion's stock price that day was triggered by the announcement that the U.S. pharmaceutical company Merck (MSD) succeeded in developing a COVID-19 treatment. The stock prices of domestic pharmaceutical companies developing COVID-19 treatments also fell one after another. Chong Kun Dang also dropped more than 8% and was designated as a short selling overheated stock.

Since its listing, Celltrion has continuously suffered from the short selling nightmare. Among individual investors, despite various positive developments such as the world's first successful development of biosimilars, complaints arose that short selling was holding back the stock price. In fact, as of the 30th, Celltrion's short selling balance exceeded 1 trillion KRW, recording the largest short selling balance in the KOSPI market. This is still a reduced level compared to the 2 trillion KRW short selling balance at the beginning of this year, which significantly decreased after the U.S. anti-short selling movement known as the 'GameStop incident.'

The loan balance, which is the standby fund for short selling, was also 2.3358 trillion KRW, ranking fourth after Samsung Electronics (5.0582 trillion KRW), SK Hynix (2.8808 trillion KRW), and LG Chem (2.7021 trillion KRW).

On the same day, Shinhan Investment Corp. lowered Celltrion's target stock price by 19%, from 320,000 KRW to 260,000 KRW. Researcher Lee Dong-geon of Shinhan Investment said, "Disappointing earnings are expected in the third quarter, and the stock price is sluggish due to reduced earnings expectations for global COVID-19 antibody treatment developers," but added, "A turnaround is expected from the fourth quarter, and the anticipation of expansion into Europe and the U.S. with Regkirona remains valid, so there is still a possibility of a stock price rebound depending on performance."

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