Short Selling Transaction Amounts Drastically Reduced Compared to Day Before Ban
Foreigners Account for 88%... Institutions Only 10%
[Asia Economy Reporter Lee Seon-ae] During the first week since the resumption of short selling, the proportion of short selling transaction value significantly decreased compared to before. Accordingly, the market impact of the short selling resumption is minimal, and rather, the overall market appears to be stabilizing.
According to the Korea Exchange on the 9th, the proportion of short selling transaction value to total market transaction value during the four trading days from March 3, the day short selling resumed, to March 7 was 3.4%. This is noticeably reduced compared to the annual figure of 4.5% in 2019 and 5.5% on the last trading day before the short selling ban last year (March 13).
The total short selling amount over the week was 3.3 trillion KRW, with an average daily short selling transaction value of 841.3 billion KRW, which is an absolute increase compared to 420.7 billion KRW in 2019. However, it failed to keep pace with the growth rate of transaction volume that surged after last year's 'Donghak Ant Movement,' resulting in a smaller proportion in the stock market.
Contrary to initial concerns that stock prices might be adjusted due to the resumption of short selling, the KOSPI 200 actually rose by 1.5% after the resumption.
Top five stocks by short selling transaction value in the KOSPI market?Celltrion (+0.2%), LG Display (+1.7%), HMM (+8.7%), Kumho Petrochemical (+8.1%), and Kakao (+0.9%)?all showed positive stock price increases during this period.
However, the KOSDAQ 150, which had a relatively higher short selling proportion than the KOSPI 200, fell by 1.3%.
Among the top short selling stocks in KOSDAQ, only Celltrion Healthcare, ranked 4th, rose by 0.6%, while the 1st-ranked Seegene (-12.3%), 2nd-ranked Kakao Games (-2.6%), 3rd-ranked KMV (-9.9%), and 5th-ranked Paradise (-2.2%) all declined consecutively.
By investor type, foreign investors accounted for 738.6 billion KRW in average daily short selling transaction value, representing 87.7% of the total short selling transaction value. This marks a clear increase from the foreign investors' average proportion of 60.0% during the one week before the short selling ban in March last year. The Korea Exchange explained that the increase in foreign investors' short selling proportion is partly due to a significant reduction in short selling by market makers among existing institutions following strengthened regulations.
For institutions, the average daily short selling transaction value was 87.5 billion KRW, with a proportion of 10%, significantly reduced from 39% during the one week before the short selling ban.
Individuals' average daily short selling transaction value was 15.2 billion KRW, with a proportion of 1.8%, noticeably increased from 7.7 billion KRW and 1.2% proportion during January to March last year.
The Korea Exchange assessed that individual short selling increased compared to before COVID-19, thanks to improvements in the lending system and expansion of lending resources by financial authorities. Additionally, the number of stocks designated as overheated for short selling decreased from 22 on the first day of resumption to 4 on the 7th, indicating overall market stabilization, the exchange emphasized.
The Korea Exchange stressed, "We will continue to monitor the possibility that short selling could act as a factor causing market sentiment instability by operating a continuous monitoring system through the Short Selling Special Inspection Team and focusing on illegal short selling inspections."
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