Samsung Group affiliates have been the main targets of short sellers so far this year, data from the Korea Exchange show.
Samsung Heavy Industries recorded the highest short selling volume of 72,500,309 shares this year, dwarfing those of other companies. LG Display, which came in second, recorded 47.44 million shares. In the same period last year, Samsung Heavy Industries also ranked first with 48.93 million shares. This year, the volume surged about 50%.
Market analysts say that Samsung Heavy Industries became a target of short sellers in the process of a capital increase with consideration. Short-selling volume exceeded two million shares in one day ahead of the confirmation of the issuance price of new shares in April.
Participants in the market analyzed that investors who hold warrants, the right to participate in a capital increase with consideration, tend to short shares mechanically. Short sellers with warrants can make more profits by pulling down the issuance price of new shares. The stock price of Samsung Heavy Industries, which hovered at around 9,000 won at the beginning of the year, is currently staying at the 6,000 won level.
Samsung Electronics and Samsung Engineering are among the stocks which rank high in terms of short selling volume. Samsung Electronics placed fourth with 3,8892,654 shares. The company had suffered attacks from short sellers due to a stock split and issues related with its affiliates. Analysts said that as the share price of Samsung Electronics fell from 2.5 million won to the 50,000 won level following the stock split, it became easier for institutional investors to short the company’s shares. In addition, they noted Samsung Electronics became a good target due to the block deals carried out by Samsung Life and Samsung Fire & Marine to sell part of their Samsung Electronics shareholdings.
In fact, on May 30 when it was known that Samsung Life and Samsung Fire & Marine would each sell their Samsung Electronics shares via a block deal, the short selling volume of Samsung Electronics reached six times of the 462,271 shares recorded on the previous day of May 29.
Samsung Life Insurance and Samsung Fire & Marine Insurance reduced their stakes in Samsung Electronics under the Financial Industry Restructuring Act, which bans financial companies of large business groups from holding more than a 10% stake in non-financial affiliates.
The stock price of Samsung Electronics, which hovered at around 50,000 won after the stock split, is now staying at around the 46,000 won level.
In addition, there has been steady short selling of Samsung Engineering shares as a rumor has been around that the company would be merged with Samsung Heavy Industries.
Other stocks that suffered heavy short selling this year included Ehwa Technologies Information, Doosan Infracore, Hyundai Merchant Marine, Pan Ocean, Mirae Asset Daewoo and Celltrion.