Over the past month, it has been observed that 92 percent of the top 50 stocks with high short-selling turnover experienced declines in their share prices. This percentage is notably higher than the 84 percent of declining stocks in the overall Korean stock market, including the KOSPI and KOSDAQ. These findings indicate that stocks with a greater short-selling presence are more likely to witness price drops during this period.
According to the Korea Exchange (KRX) on Oct. 17, 46 of out of the 50 stocks with the highest proportion of short-selling trading volume in the domestic stock market from Sept. 18 to Oct. 16 saw a decline in their share prices during the period. The short-selling trading volume ratio is calculated by dividing the short-selling trading volume by the total trading volume.
In the case of BGF Retail, which had the highest short-selling ratio, a whopping 37 percent of the trading volume was attributed to short selling. This means that four out of 10 investors were betting on a decline. In the past month alone, the stock price of BGF Retail has fallen by 9.4 percent.
In the case of game-related stocks vulnerable to short selling, the declines were even more significant. During this period, Kakao Games had a short-selling trading volume ratio of 26 percent, resulting in a 12.4 percent drop in its stock price. Netmarble, with a short-selling ratio of 24 percent, experienced a 13.9 percent decline in its stock price. As for Ecopro BM, which had seen substantial stock price gains this year, 23 percent of its trading volume in the past month was attributed to short selling, leading to a 13.4 percent decrease in its stock price.
It is expected that short-selling trading volume will reach a record high this year. Based on the data from the KRX, the total short selling volume in the domestic stock market for this year amounts to approximately 148 trillion won (US$109.14 billion). It is anticipated to surpass 150 trillion won by the end of the year. This month, the daily average short-selling trading volume on the KOSPI increased by 21.05 percent compared to the previous month, reaching 583.5 billion won, up from 482 billion won.
Last year, the short-selling trading volume amounted to approximately 144 trillion won, marking a record high. However, the volume has already exceeded last year’s figures within just 10 months of this year. Particularly, the short-selling trading volume on the KOSDAQ market during this period surged to approximately 52 trillion won, showing a remarkable 96 percent increase compared to the same period last year. Notably, around 36 percent of short selling on the KOSDAQ market was related to Ecopro and Ecopro BM.