[단독] ‘Korean version of GameStop’ gets mad… Massive liquidation of Goldman·CS short sale

The’Anti Short Sale Bus’ operated by the Korea Stock Investment Association (Han Tu-yeon), a group of individual investors, is moving from Sejong-daero, Seoul on the 2nd. 2021.2.2/News1 © News1

While individual investors, so-called Donghak ants, selected Celltrion and HLB, which have a high proportion of short selling, as targets for the’Korean version of the game stop movement’ against the short selling forces, the global investment banks Goldman Sachs and Credit Switzerland (CS) are two stocks. It was found that the short-selling position was largely liquidated.

In the process of fierce battle between individual investors and short-selling hedge funds in the U.S., short-selling hedge funds are in a liquidity crisis due to the skyrocketing gamestop stock price. It seems that it has started short selling and buying to repay the balance.

On the 1st, when the Korea Stock Investors Association, an individual investor rights group, announced that it would hold a’Korean version of the game stop movement’ against short selling, foreign investors bought Celltrion and HLB in large numbers and asked’whether it is short covering or fundamental investment’. Opinions were divided, but it was proven that many of them were short covering.

According to the Korea Exchange on the 7th, Goldman Sachs and CS were excluded from the mass holders of Celltrion and HLB, respectively, on the 1st. The bulk short sale holder refers to an investor who has a short sale balance of 0.5% or more of the total number of listed stocks in the relevant stock. Large short sale holders are obligated to report to the exchange.

It has been about 3 years since Goldman Sachs short selling celltrion holders in large quantities since January 25, 2018, and it has been about 1 year and 9 months since April 24, 2019 that CS was excluded from HLB’s large short sales holders.

Currently, there are two bulk holders of Celltrion short selling: Merrill Lynch and Morgan Stanley, and three large HLB short selling holders: Merrill Lynch, Morgan Stanley, and Citigroup Global Market Securities. They are all global IBs.

As Goldman Sachs and CS organized a lot of short selling positions for the two stocks, the short selling balances of the two stocks and the proportion of the short selling balances to the market cap also decreased significantly.

On the 1st, Celltrion’s short selling balance amounted to 492,3666 shares, a sharp drop of about 1 million shares from the previous day. As a result, the proportion of short selling balances fell to 3.65%. It is the first time in 4 years and 8 months since June 30, 2016, when the exchange has compiled the short selling balance status of Celltrion.

The short selling balance is the amount of stocks related to short selling that have not yet been paid off. This refers to the amount of short-selling or waiting for short-selling.

On the same day, HLB’s short sale balance also decreased by about 520,000 shares from the previous day (3,329,6305 shares) to 2.77 million shares. The share of short selling fell from 6.22% to 5.24%. The next day, the 2nd, it fell to 4.99%. This is the lowest level in about 2 years and 4 months since October 2018.

On the 1st, foreigners net bought Celltrion (352.4 billion won) and HLB (53.4 billion won) in large quantities, which proved that there was a considerable amount of short covering to clear up their short selling positions.

In fact, at the Goldman Sachs counter on that day, a total of 62,8719 shares of Celltrion were net purchased. The amount exceeded 220 billion won. This is the largest net purchase per day at the Goldman Sachs window.

At the CS window, a total of 113,554 shares of HLB net purchase was made. It is the largest net purchase per day at the CS window in 1 year and 3 months since October 8, 2019 (140,413 shares). In terms of amount, it reached about 10 billion won, ranking fourth in history.

On this day, Celltrion ranked first in foreigners’ net buying of KOSPI, and HLB ranked second in foreigners’ net buying of KOSDAQ.

Hwang Se-woon, a visiting researcher at Sangmyung University’s DnA Lab, said, “We believe that the game stop movement is likely to occur in Korea, and it is possible that it is a movement that has arranged positions in advance to prepare for possible events.” The rate of decline was fast, but I wonder if the signs of the Korean version of the game stop movement had an effect.”

However, some observe that it is difficult to reduce the proportion of Celltrion’s short selling balance any more. An analyst at a securities firm said, “If you listen to the stories of investors who currently have short selling positions on Celltrion, there are also quite a few arbitrage hedges that have already confirmed profits through convertible bonds (CBs). This is a quantity that does not require liquidation of short selling positions. “The fact that Gamestop stock prices plunged in the New York stock market will also have an impact,” he said.

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