Short selling is a trading technique in which investors sell borrowed shares on the belief that their price will fall in the near future. When prices fall, they can buy back the stocks at a lower price, pocket the profit, and return the shares to the original owner. (image: Kobiz Media / Korea Bizwire)
SEOUL, Aug. 6 (Korea Bizwire) – With the KOSPI stalling due to a series of poor earnings reports, short selling hit a record during July, hinting that investors have a negative outlook on the future of the Korean economy.
According to the Korea Exchange on July 5, the average daily value of short selling in the KOSPI was 367.9 billion won, and that of the KOSDAQ was 63.9 billion won, the biggest tally since January 2008, when the exchange market started compiling the data.
Compared with last December’s combined daily value of 214.6 billion won and 206.7 billion won in July, 2014, short selling has more than doubled, with a sudden increase this year. It stayed around the 200 billion won level in January and February, but increased to around 300 billion won in March, before snowballing past 400 billion won in July.
Short selling is a trading technique in which investors sell borrowed shares on the belief that their price will fall in the near future. When prices fall, they can buy back the stocks at a lower price, pocket the profit, and return the shares to the original owner.
Increased short selling typically indicates that investors anticipate a fall in share prices.
Of note, short selling increased sharply on the KOSPI with large-scale stocks. There was 367.9 billion won of short selling on the KOSPI last month, marking the first time the monthly figure has surpassed 300 billion won.
Meanwhile, short selling took the biggest toll on Samsung Heavy Industries, Samsung’s shipbuilding unit, accounting for 16.7 percent of its accumulated trading volume this year. Its share price had already fallen by 30 percent so far this year as of the end of July.
By John Choi (johnchoi@koreabizwire.com)
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