Lotte Tour Development "Reopening Expectations... Steady Decline in Short Selling Volume"

Lotte Tour Development announced on the 9th that short selling volumes have been steadily decreasing amid expectations for reopening.

According to the company, among the current short selling balance of 6.3 million shares (9.36%) of Lotte Tour Development, only 3.12% (2.3 million shares) are general short selling volumes invested with the hope of a stock price decline.

Lotte Tour Development explained that the remaining 4.6 million shares (6.24%) nominally include volumes from past overseas investors who engaged in securities lending transactions as a hedge when issuing overseas convertible bonds (CBs).

Excluding special volumes, when applying only the genuine short selling volumes (3.12%) that utilize the mechanism of stock price decline, the short selling balance ranking of Lotte Tour Development significantly drops from 1st place to 10th place.

Lotte Tour Development emphasized, "Overseas CBs are fundamentally investments that profit when the stock price rises, so special volumes are completely different in nature from general short selling volumes that hope for a stock price decline."

Overseas investors purchased 5.1 million shares of overseas convertible bonds from Lotte Tour Development in September 2019, and among these, 4.6 million shares were lent from Donghwa Investment Development, an affiliate of Lotte Tour Development, and temporarily sold in the market using a so-called 'Delta Placement' trading method.

Lotte Tour Development explained that such trading is one of the frequently used investment techniques overseas to reduce the actual exposure ratio to specific stocks. The company also noted that a similar trading method was applied during the issuance of overseas convertible bonds by LG Display in the past.

Lotte Tour Development stressed, "Since 67% of the total short selling balance consists of volumes generated by the Delta Placement trading method, judging solely by the short selling figures may cause a significant optical illusion."

Additionally, the company stated that some recent claims about a sharp increase in short selling volumes are completely untrue.

According to the Korea Exchange, the short selling volume of Lotte Tour Development has been steadily decreasing from March 7 (8.17 million shares, 11.12%) to May 3 (6.9 million shares, 9.36%). The company explained that the reduction in short selling volumes is due to growing expectations for Lotte Tour Development as a beneficiary stock of reopening.

In fact, since the large-scale resumption of direct flights between Jeju and China on March 26, the company’s core business, the casino, has shown a turnaround trend with both drop amounts and visitors continuously setting new records daily.

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