Starting from the 31st, short selling is set to resume, and within the KOSDAQ market, there are noticeable corporations with significantly increased securities lending balances. Securities lending refers to the act of lending stocks to investors. Since it is often done to borrow shares for short selling, it is also considered an indicator that precedes short selling.
On the 19th, according to findings through securities firms' trading systems over the last five trading days (March 12 to March 17), the stock with the largest increase in securities lending balance in the KOSDAQ market was Nexters (formerly Action Square). The quantity of Nexters' securities lending balance increased by 1,243,47 shares during the survey period, reaching 1,602,373 shares. The amount was 4.3 billion won. A notable aspect is that the securities lending balance, which had consistently been around 300,000 shares, exploded from the 12th onward.
Since the news broke last year that Jang Hyun-kook, the former CEO of Wemade, would join Nexters, the company's stock price has been on the rise. The stock, which had been stagnant in the 1,000 won range last year, surged to the 4,000 won range in January this year before dropping back down to the 2,000 won range. The current stock price is 3,000 won (closing price on March 18). The day before (18th), it was reported that Nexters had completed a private token sale worth about 14.4 billion won, which contributed to its sharp increase of 11.11%.
Ecopro BM, a cathode material corporation, has also seen a significant increase in securities lending balances recently. As of the 17th of this month, it has the highest securities lending balance in the KOSDAQ market. The securities lending balance is 13,957,739 shares, with a balance amount of 1.5 trillion won. Compared to KODEX 200, which is in second place in the KOSPI market (33,389,312 shares, 1.17 trillion won), its securities lending balance amount surpasses that.
Ecopro BM announced on the 28th of last month that it would withdraw its plan to transfer to the KOSDAQ market, resulting in a 11.19% drop in its stock price. The price, which had risen to 140,800 won on February 24, fell to 111,300 won as of the 18th of this month, declining by over 20%.
In addition, in the KOSDAQ market, securities lending balances were found to be high in the following order: Ecopro (10,829,550 shares, 648.69 billion won), HLB (9,111,759 shares, 688.84 billion won), Kukil Paper (7,602,916 shares, 6.08 billion won), and SFA Semicon (7,044,571 shares, 22.61 billion won).
Securities lending occurs when a securities firm or investor holding stocks lends the stocks to another investor. Since borrowing stocks is essential for short selling, an increase in the securities lending balance for a particular company's stocks could be interpreted as a higher likelihood of short selling. Short selling is an investment method where an investor borrows stocks to sell them in anticipation of a price decline and then buys back the stocks after a certain period when the price drops to repay them. Therefore, a corporate securities lending balance that increases could signify a greater number of investors betting on a future drop in stock price.
A source in the financial investment industry noted, "While an increase in securities lending balance does not necessarily lead to short selling, there is room for interpretation based on past experience that many investors are targeting short selling. Moreover, investors are also trending towards referring to changes in securities lending balances when making investments."