"Did Ecopro Rise Too Much? Short Selling Trading Value Hits '100 Billion Won' for 2 Consecutive Trading Days"

Ecopro touched 800,000 KRW during the trading session, fueled by buying pressure from individual investors. While market experts consider this overheating, short-selling transaction amounts exceeded 100 billion KRW for two consecutive trading days. Unlike individuals, foreign and institutional investors view the stock as overvalued.

According to the Korea Exchange on the 12th, Ecopro's short-selling transaction amount on the 11th was 104.525 billion KRW. Following the record high of 116.564 billion KRW on the 10th, it recorded short-selling transaction amounts exceeding 100 billion KRW consecutively. Short selling literally means borrowing stocks that one does not own and selling them. If the stock price falls afterward, the stocks are repurchased to return the borrowed shares, generating a profit.

원본보기 아이콘

Ecopro's average short-selling transaction amount this month was around 31.5 billion KRW. On the 10th and 11th, the short-selling transaction amounts were about 3.5 times the usual level. The short-selling balance amount exceeded 100 billion KRW on March 9th (102.3 billion KRW) and surged to over 200 billion KRW on the 27th (206.6 billion KRW). On April 4th, it reached 270.7 billion KRW, marking the highest short-selling balance amount of the year.

Although the balance amount decreased to 195.8 billion KRW on the 5th, it rose again to 237.8 billion KRW on the 6th and 228.5 billion KRW on the 7th. Since short-selling balance amounts are generally compiled two trading days later, the balance on the 7th is the most recent figure. An executive from an asset management company said, "Most private equity firms and foreigners judge that Ecopro's stock price is overvalued."

원본보기 아이콘

In fact, Ecopro's stock price surged from 110,000 KRW at the beginning of the year (January 2nd) to 769,000 KRW on the 11th, a 599.0% increase in about four months. Its market capitalization also expanded to 19.8995 trillion KRW. This is more than KB Financial Group, ranked 16th in KOSPI market capitalization (19.1977 trillion KRW), and approaching Samsung C&T, ranked 15th (20.1838 trillion KRW).

The main buyers of Ecopro shares are individuals. From the beginning of April to the 11th, individuals alone purchased shares worth 167.684 billion KRW. Foreigners and institutions sold shares worth 89.611 billion KRW and 86.037 billion KRW, respectively. Even when extending the period from January 2nd to the present, individual buying pressure stands out. This year, individuals have net purchased 1.1639 trillion KRW, while foreigners and institutions have net sold 470.874 billion KRW and 698.361 billion KRW, respectively.

원본보기 아이콘

The market evaluates the explosive buying by individuals as due to "having investment funds but lacking suitable investment destinations to expect returns." Except for secondary battery-related stocks, there are virtually no sectors to bet on for growth amid significant recession concerns. However, market experts assess Ecopro's stock price as overheated. This is why securities firms' research centers rarely publish reports related to Ecopro.

The few reports that have been released are overwhelmingly negative. On the 12th, Hana Securities downgraded Ecopro's investment opinion to 'Sell.' Researcher Kim Hyun-soo of Hana Securities stated, "It is a great company, but the current stock price already reflects much of that greatness," adding, "We set a target price of 454,000 KRW and downgraded the investment opinion to 'Sell.'" Kim also evaluated, "The current market capitalization exceeds the expected corporate value five years from now," and "For the stock price to rise further, time must pass to reflect 2030 earnings, which requires a considerable adjustment period."

Earlier, Samsung Securities also downgraded Ecopro's investment opinion from 'Buy' to 'Hold.' Although the target price was raised, it was set at 380,000 KRW, about half of the current stock price. Researcher Jang Jung-hoon of Samsung Securities pointed out, "Holding companies mainly earn income from dividends received from subsidiaries, and the value of holding companies has traditionally been discounted based on the value of their holdings," adding, "Since March, they have started to receive a premium rather than a discount, and as of the end of March, they are valued about 20% higher."

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.