Short selling of Celltrion stocks has surged again after Goldman Sachs reported negatively on the company. The average percentage of short selling for five trading days increased more than 10 percent points after Goldman Sachs’ report on August 12. There is a possibility that additional short selling will increase sharply as the balance of share lending had recently risen for four trading days in a row.
According to the data from the short-selling status of the Korea Exchange on August 26, the amount of Celltrion’s short selling transactions came to 209.5 billion won (US$187.22 million) for five trading days from August 14 to 21 after Goldman Sachs released its report to the market, according for 26.38 percent of the total transactions.
The figure increased over 10 percent points from 16.08 percent, or 158 billion won (US$141.2 million), of the previous five trading day from August 6 to 10. It rose over 50 billion won (US$44.68 million) in terms of amount. In particular, the percentage of the company’s short sale reached 31.55 percent on the 16th and 32.07 percent on the 20th, exceeding the 30 percent level. In other words, it showed a meaningful increase in short selling after the report.
Goldman Sachs released the report on the 12th (local time) that lowers Celltrion’s target price to 147,000 won (US$131.37), saying that the company would have difficulties in expanding its share in the US biosimilar market and putting up a good show in the European market due to strong competition. However, Goldman Sachs’ target price of Celltrion was almost half of its closing price at the time, sparking opposition from investors. Some criticized that it was an excessive devaluation aiming for short sale.
It is clear that the foreign report helped increase the short sale, according to market experts. A former head of a securities firm’s research center said, “I think the negative report played a role in reducing psychological burdens for short selling. Institutional and foreign investors would have carried out the short sale after it gained confidence in “the fall in stock prices” through the report. However, it is too much to say that it wrote up the report aiming for short selling.”
The price of Celltrion shares recently continued to remain bullish despite the upsurge of short selling. It closed at 279,500 won (US$249.78) on the 24th, up 2.76 percent from 272,000 won (US$243.07) on the 10th before the report was released. The pension fund purchased more than 260 billion won (US$232.35 million) worth of the stocks over the same period, pulling up the stock price, while individual investors net sold 324.4 billion won (US$289.9 million).
However, the fact that the balance of Celltrion’s loan transactions increased for four consecutive trading days and an increasing number of investors bet on the decrease in stock prices is a negative factor for stock prices in the future. According to the data from the Korea Financial Investment Association, the balance of Celltrion’s stock purchasing loans grew nearly 500 billion won (US$446.83 million) from 7.08 trillion won (US$6.33 billion) on the 20th to 7.57 trillion won (US$6.77 billion) on the 23rd. The increase in the balance of Celltrion’s stock loans means more borrowing shares and it is generally considered a leading indicator of short selling.