In the past month, among the top 10 stocks with increased short selling balances, seven have seen their prices rise. This indicates that an increase in short selling does not necessarily lead to a decline in stock prices, suggesting a need to consider overall corporate performance and market supply and demand.
On October 11, an analysis of short selling balances and stock price fluctuations from the Korea Exchange revealed that among 76 stocks included in the top 50 for short selling balance in both the KOSPI and KOSDAQ markets on September 7 and 6, 28 stocks showed an increase in balance. Of these, 20 stocks (71.4%) experienced price increases, while 8 stocks (28.6%) saw declines. The price fluctuation rates were based on adjusted price statistics from the Korea Exchange.
The stock with the largest increase in short selling balance was Woori Technology, listed on KOSDAQ. Its short selling balance rose from 5.33% on September 7 to 7.07% on September 6, an increase of 1.74 percentage points. The balance quantity also increased by 3,001,549 shares. However, during the same period, the stock price surged by 20.41%.
In the KOSPI market, Korea Electric Power Technology and Hanmi Semiconductor were notable examples. Korea Electric Power Technology's short selling balance increased from 1.98% to 3.39%, a rise of 1.41 percentage points, while its stock price rose by 19.70%. The balance quantity increased by 540,126 shares.
Similarly, Hanmi Semiconductor's short selling balance rose from 5.55% to 6.54%, an increase of 0.99 percentage points, with its stock price climbing by 20.87%. The balance quantity grew from 5,288,653 shares to 6,234,397 shares, an increase of 945,744 shares. CS Wind also saw its balance increase from 2.89% to 3.85%, a rise of 0.96 percentage points, while its stock price increased by 22.47%.
A similar trend was observed in the KOSDAQ market. KM Wavelength's short selling balance rose from 2.32% to 3.17%, an increase of 0.85 percentage points, while its stock price skyrocketed by 42.66%. Wonik Holdings also saw its balance increase from 2.71% to 3.53%, a rise of 0.82 percentage points, with its stock price climbing by 36.00%.
Conversely, some stocks experienced both an increase in short selling balance and a decline in stock price. SK Eteronics saw its balance rise from 3.72% to 4.24%, an increase of 0.52 percentage points, while its stock price fell by 3.08%. APR also experienced a rise in balance from 1.75% to 2.12%, an increase of 0.37 percentage points, but its stock price dropped by 8.38%.
The mixed performance of stocks with increased short selling balances illustrates that such increases cannot be uniformly interpreted as signals for stock price declines. Short selling is utilized not only by investors anticipating price drops but also as a hedge against price volatility of held assets.
Short selling balances reflect the positions remaining at a specific point in time, making it difficult to ascertain the actual trading timing or prices for investors. Therefore, an increase in short selling balance does not necessarily mean that short sellers have incurred losses if stock prices rise.
A securities industry official stated, "Even if short selling balances increase, strong buying interest in the stock can lead to price increases. It is important to examine the reasons behind the increase in short selling balances, along with the company's performance and market supply and demand."
* This article has been translated by AI.
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