The stocks included in the developed market index became the main target of short stock selling forces. As Celltrion Healthcare Co., SillaJen Inc. and ING Life Insurance Co. were included in the Morgan Stanley Capital International's Korean index in November, the amount of short selling of the three companies’ stocks rose to its highest level.
According to investment banking industry sources on December 5, the three companies’ stocks saw the volume of short selling of their stocks see increase before the inclusion in the MSCI’s Korean Index.
The amount of short selling of Celltrion Healthcare share recorded at 1,523,493 on November 30, a day before the index inclusion on December 1. The figure was the highest ever since the flotation, accounting for more than 35 percent of the entire trading volume. The volume of short selling of SillaJen stock stood at 1,002,318 on the same day, while that of ING Life share totaled 663,711. The figures were also the highest for the both of the companies.
Securities market experts say that short stock selling forces showed a stronger selling spree as the price of stocks usually increases until the day before the MSCI inclusion and decrease after the inclusion.
Kim Dong-young, analyst at Samsung Securities, said, “There is a general share price trend that the price of stocks rises until the day before the MSCI inclusion and drops the day of the inclusion. So, it is highly likely that stock selling forces have fished for such pattern.”
This month, the stock price of ING Life, Celltrion Healthcare and SillaJen has been on a downtrend.