Despite the bullish KOSDAQ market, the short sale trading volume on the market has increased compared to last month. Foreign and institutional investors are buying the stocks of mainly biotech firms, which saw a significant rise in stock prices, but they are seeking to hedge due to an anxiety.
According to the Korea Exchange (KRX) on November 20, the daily average short-selling trading volume on the KOSDAQ market came to 5.62 million shares as of November 17, up 10 percent from 5.11 million shares last month. The KOSDAQ index surged 11.7 percent this month alone, showing an upward trend. However, the amount of investors’ short selling trades rather grew owing to concerns over the market fall in the future. The short sale trading volume revealed by the KRX doesn’t include short-selling repayment.
When the KOSDAQ index goes down or shows a slowdown in upturn in the future, the amount of short selling trades has a sign of sharp increases. On the 17th when the KOSDAQ index dropped 0.56 percent after rising for seven trading days in a row, the daily short-selling trading volume reached 7.24 million shares. It led to record-high trading of its shares on the KOSDAQ market this year on a day-to-day basis. With an additional adjustment, the amount of short selling trades is highly likely to grow further. When the short-selling trading volume rises, the balance of short sale on the KOSDAQ market, which decreased to 206.7 million shares as of the 15th, can increase again.
By item, there was a high short-selling volume of mainly biotech companies on the KOSDAQ market on the same day. Celltrion saw its short sale trades amount to 2.99 million shares until the 16th, accounting for 11.2 percent of the total trading volume. The short sales of Celltrion Healthcare stocks also stood at 604,432 over the same period, taking up 2.1 percent of the total trades. That of Sillagen also came to 1.25 million shares.
For the recent short selling trades, institutional and foreign investors focused on purchasing biotech stocks and short selling them. According to the KRX, institutional investors net bought 1.13 trillion won (US$1.03 billion) worth of stocks on the KOSDAQ market this month but short sold 845,325 shares on the 17th alone, maintaining the short selling position of 650,000 cases a day on average. They bet on the KOSDAQ market with the recent upward tendency but braced for stock declines with short sale at the same time. Foreign investors also net purchased 383 billion won (US$348.34 million) worth of shares but recorded 5 million shares of short sale a day on average on the KOSDAQ market during the same period.