KOSPI Touches 3200... Record High Short Selling Balance Amid Rising Fatigue

[Financial News] The short selling net balance in the domestic stock market has soared to an all-time high since the full resumption of short selling transactions at the end of last March. It is interpreted that as the stock market surged in a short period after the new government took office, the number of investors predicting a market correction also increased.
According to the Korea Exchange on the 13th, the KOSPI index rose to 3216.69 at one point during the day on the 11th, renewing its annual high. Even in April, the KOSPI had fallen to 2284.72 (April 9) due to the impact of Trump tariff uncertainties. It has risen nearly 1000 points in just three months. The KOSPI index surpassed the 3200 mark during the day for the first time in 3 years and 10 months since September 7, 2021 (3201.76).
As the index continues to rise steeply, the number of investors predicting a stock price decline has also increased. As of the 9th, the short selling net balance of KOSPI was recorded at 9.0445 trillion won, the largest since March 31, when short selling was fully resumed.
At that time, the short selling net balance, which was less than 4 trillion won, surged by 131% in about three months. The proportion of short selling net balance in the KOSPI market capitalization also increased from 0.19% to 0.35% during the same period.
The short selling net balance in the KOSDAQ market also recorded the highest since March 31, at 3.9287 trillion won as of the 9th.
Short selling is an investment technique where stocks are borrowed and sold without holding them, and then bought back cheaply when the stock price falls. The short selling net balance is the remaining quantity after selling the borrowed stocks, and an increase in the balance is interpreted as there being many investors who believe the stock price will fall further.
Among KOSPI-listed stocks, SKC, a secondary battery and semiconductor material company, had the largest proportion of short selling net balance relative to market capitalization, at 5.55%. It was followed by Hanmi Semiconductor (4.92%), Shinsung E&G (3.89%), Hotel Shilla (3.84%), and Dongbang (3.48%).
The increase in short selling net balance can be interpreted as a phenomenon preparing for a correction in the domestic stock market, which is continuing its daily upward rally. The KOSPI index has shown a positive weekly return in all but two weeks since the third week of April. However, considering that the uncertainty of tariffs from the US is gradually easing and the global preference for risky assets is reviving, there are many forecasts that the index has sufficient room for further rise. Accordingly, there is also an expectation that investors who responded to the domestic stock market with short selling may engage in 'short covering' (repurchasing stocks to close short positions) before their losses grow larger, thereby lifting the market again.
Korea Investment & Securities recently raised its forecast range for the KOSPI in the second half of the year from 2600~3150 points to 2900~3550 points. Kim Dae-jun, a researcher at Korea Investment & Securities, said, "We must also consider the possibility of the index rising further, reflecting the interest rate cuts and supply-demand improvements in the fourth quarter."




nodelay@fnnews.com Park Ji-yeon Reporter