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Short selling balances hit $6.8 bil. as investors hedge against KOSPI rally

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By Lee Yeon-woo
  • Published KST
  • Updated KST
Electronic signboards at Hana Bank in Seoul display Friday's closing figures for the KOSPI, the won-dollar exchange rate and the Kosdaq. Yonhap

Electronic signboards at Hana Bank in Seoul display Friday's closing figures for the KOSPI, the won-dollar exchange rate and the Kosdaq. Yonhap

As the KOSPI continues its rally fueled by President Lee Jae Myung’s market-friendly policies, a growing number of investors have turned to short selling, betting on a potential drop, data showed Sunday.

According to the Korea Exchange, the net short position on the benchmark KOSPI reached 9.44 trillion won ($6.8 billion) as of Wednesday, the earliest available date for the data.

This marks the highest level since short selling fully resumed on March 31, representing a 131 percent increase from just under 4 trillion won at the end of March.

The proportion of short selling relative to the KOSPI's total market capitalization increased from 0.19 percent to 0.35 percent.

Among individual stocks, SKC — a producer of secondary battery and semiconductor materials — recorded the highest net short position relative to its market cap, at 5.55 percent. It was followed by Hanmi Semiconductor at 4.92 percent, Shinsung E&G at 3.89 percent and Hotel Shilla at 3.84 percent.

The growing interest in short selling is seen as a hedge against a potential short-term correction in the domestic stock market.

The KOSPI has recently seen a strong upward run. Since the third week of April, the index has posted gains in 11 out of the past 13 weeks. It is now up 32 percent for the year, nearing its historical peak.

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While many analysts agree on the possibility of a short-term correction, they believe the market’s long-term outlook remains strong. Uncertainty surrounding U.S.-led tariffs continues to ease and global risk appetite shows signs of recovery.

JPMorgan recently upgraded its rating on the KOSPI from neutral to overweight, forecasting the index could approach 5,000 within two years. The firm noted if corporate governance reforms continue smoothly, it recommends buying on dips during periods of market correction.