SEOUL, Jun. 10 (Korea Bizwire) — Short-selling of stocks on the South Korean bourses jumped to a seven-month high in May as local shares remained bearish amid escalating trade tension between the U.S. and China, data showed Monday.
Daily stock short-selling averaged 537.5 billion won (US$454.8 million) in the main KOSPI and secondary KOSDAQ markets last month, up 37.1 percent from a month earlier, according to the data compiled by the Korea Exchange (KRX).
It marked the highest monthly trading volume since last October, when the daily short-selling volume stood at 633.6 billion won, the data showed.
Stock short-selling is a trading technique in which investors sell stocks they borrowed on the belief that share prices will fall in the near future.
When the prices fall, they can buy back the stocks at lower prices, pocket the profit and return the shares to the original owner. Increased short-selling typically indicates that many investors anticipate a slump in stock prices.
Last month, the main KOSPI and the secondary KOSDAQ fell 7.3 percent and 7.7 percent, respectively, with foreign investors selling heavily.
Foreigners sold a net 2.9 trillion won worth of local stocks in May, a drastic shift from a net buying of 2.5 trillion won a month earlier, according to data from the Financial Supervisory Service (FSS).
The daily short-selling volume by foreign investors stood at 331.3 billion won in May, accounting for 61.6 percent of total daily short-selling volume, according to the data.