As the domestic stock market continues its recent upward rally, the short-selling balances in the Korean securities market (KOSPI) and KOSDAQ market have surged.
According to Samsung Securities on the 20th, the short-selling balance of KOSPI 200 constituents stood at 8.6 trillion won as of July, a 1.5-fold increase from the 3.4 trillion won recorded at the end of March when short-selling transactions were fully resumed. The short-selling balance of KOSDAQ 150 constituents is 3.1 trillion won.
Short selling is an investment technique where an investor borrows shares they do not currently own to sell first, and then repurchases them at a lower price if the stock price declines to repay the borrowed shares.
Jeon Kyun, a researcher at Samsung Securities, noted, "While the short-selling balance is increasing as KOSPI 200 approaches its all-time high, it is still at 30-70% of the peak short-selling balance reached in 2023." During the same period, in terms of the number of shares shorted, KOSPI 200 increased from 60 million shares in March to 120 million shares, while KOSDAQ 150 rose from 39 million shares to 86 million shares.
There is a differentiation in short-selling balances by stock. While the short-selling balance of Samsung Electronics has consistently decreased since last March, that of SK hynix has increased by 16%. Doosan Enerbility has also seen its short-selling balance surge tenfold since the resumption of short selling, and Hanwha Aerospace recorded its highest short-selling balance since 2019. Jeon said, "Hyundai Motor is gradually increasing at a steady pace, while Meriz Financial Group reversed its trend after a surge in short-selling balance in June this year."
By sector, the short-selling balances in the securities and insurance sectors have surged 7.3 times and 9.9 times, respectively, compared to the end of March. This increase is attributed to soaring stock prices driven by expectations of shareholder returns and revenue growth. This is the highest level since 2019.
The utility and transportation sectors also increased by 3 times and 5.1 times, respectively, compared to the end of March. The consumer staples sector rose by 3.1 times. The surge in stock prices due to improved performances from exports in sectors like electricity, shipbuilding, and the Korean Wave has contributed to the increase in short-selling balances.
In the energy chemical sector and information technology sector, short-selling balances increased by 4.1 times and 3.1 times, respectively, during the same period. It is presumed that short-selling pressure has intensified in sectors with high uncertainty regarding performance.
Sectors with relatively smaller increases in short-selling balances include automotive and steel. The short-selling balances in the automotive and steel sectors have increased by 1.5 times and 1.3 times, respectively, compared to the end of March. Jeon projected, "Until fundamental turnaround events become visible, short-selling pressure is expected to remain relatively mild."
He remarked, "Despite the surge in the valuation of the short-selling balance due to skyrocketing stock prices, the increase in the number of shorted shares may be modest in comparison to the amount. While the securities sector shows the highest ever short-selling balance amount, the number of shorted shares is only at 50% of the peak level in 2019."