On the Day KOSPI Hit Its Lowest Point of the Year, a 1 Trillion Won Short Selling Bombshell

Short Selling Trading Volume of 1.0951 Trillion KRW on 30th Last Month
Second Highest with 1.116 Trillion KRW on First Day of Short Selling Resumption (May 3)
Institutional Short Selling Increased Significantly by 116 Billion KRW

[Image source=Yonhap News]

[Asia Economy Reporter Ji Yeon-jin] On the 30th of last month, when the KOSPI fell to its lowest point of the year, short selling transactions exceeding 1 trillion won were made in a single day. This is the second largest scale since short selling resumed this year.

According to the Korea Exchange on the 1st, short selling worth a total of 1.0951 trillion won was made, with 818.4 billion won in the KOSPI market and 276.7 billion won in the KOSDAQ market. This is the largest scale since May 3rd this year, when short selling, which had been suspended due to COVID-19, was partially resumed and recorded 1.1094 trillion won. In particular, institutional short selling transactions in the KOSPI reached 116 billion won. Compared to 62.5 billion won on May 3rd, the first day of short selling resumption, this is nearly double.

In the KOSPI, Krafton recorded the highest short selling at 65.1 billion won, followed by KakaoBank (51.7 billion won), Samsung Electronics (49.5 billion won), Iljin Materials (46 billion won), and SK Square (33.9 billion won). Especially, KakaoBank and Iljin Materials, whose short selling transaction ratios exceeded 10%, fell sharply by 6.69% and 7.89% respectively the previous day, taking a direct hit from short selling. In the KOSDAQ, Kakao Games had the highest short selling at 54.7 billion won, followed by Seegene (25.9 billion won), L&F (24.6 billion won), and Celltrion Healthcare (18.7 billion won).

The Korea Exchange designated four stocks?Seegene, Iljin Materials, Komipharm, and TCK?as short selling overheated stocks on that day and restricted short selling transactions. Short selling overheated stocks are designated when the stock price falls by 5-10%, the short selling ratio is more than three times the short selling ratio of the previous quarter index, and the short selling transaction amount increases more than six times.

Short selling is also considered a burden factor for the year-end stock market. As newly listed companies such as KakaoPay and Hyundai Heavy Industries are included in the KOSPI 200, short selling will be possible from the 10th of this month. Moreover, the loan balance, regarded as a leading indicator of short selling, sharply increased after the KOSPI fell below the 3,000 mark last month, exceeding 80 trillion won on the 15th of last month. Although the loan balance decreased to 75 trillion won as of the previous day, it remains significantly higher compared to the beginning of the year (43 trillion won).

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