Ants that the stock market falls vs. securities prices that have limited impact
“Bio, small and medium-cap stocks with higher stock prices compared to earnings”
(Photo = Getty Image Bank)
[편집자주] Anxiety among individual investors, so-called Donghak ants, is growing ahead of the resumption of empty selling. Although the KOSPI 3000 era, which was considered unanswered, was opened, the resumption of short selling could add cold water to the rally. Is short selling really the main culprit that disturbs the stock market, or is it a reinforcement group that prevents the stock price bubble and maintains a fair price? Is it really a’tilted playground’ that is unfavorable to ants, Hankyung.com looked into the controversial’short selling’ through three series. .
As the time to resume short selling is approaching two months in the future, controversy over the extension of the short selling ban is heating up again.
If short selling resumes, there are concerns that it will spill cold water on the Korean stock market, which is showing an uptrend after 10 years, and that the rapidly overheated stock market bubble should resume before it gets bigger.
According to industry sources on the 14th, the Financial Services Commission recently reaffirmed its policy to finalize system improvement with the goal of restarting short selling in March.
Earlier, the Financial Services Commission temporarily banned short selling for six months from March last year as the stock price fell due to the spread of the novel coronavirus infection (Corona 19). Short selling is prohibited until March 15th, after 6 months of renewal.
Although the Financial Services Commission aimed to resume short selling in March, political movements ahead of re-election in April, and Donghak ants opposing the resumption of short selling are variables that will affect the Commission’s decision.
Resumption of ant short selling “will return to KOSPI 2000”
(Photo = National Petition Homepage screen capture)
Ahead of the resumption of short selling, individual investors are deepening their agony. This is because short selling is likely to play a role in encouraging a decline in certain stocks as it has the characteristic of betting on a decline in stock prices.
In the meantime, there have been many cases where stock prices have plunged due to abnormal short selling, and individuals have been criticized for being a’tilted playground’ as they have limited access opportunities compared to institutions and foreigners with strong intelligence and large-scale funding power.
In the Blue House National Petition, a petition requesting a permanent ban on short selling has been approved by more than 100,000 people as of the afternoon of the 13th. If more than 200,000 people are consented to a national petition, the relevant officials, such as the head of each department or agency, and the Blue House chief and secretary, must directly respond.
The author of the petition, which was published on December 31st last year and can be agreed by the 30th, said, “What is wrong with the current stock market that banned short selling? If we revitalize short selling, this government and the Democratic Party will face headwinds.” Insisted.
Eui-jeong Jeong, CEO of the Korea Stock Investors Association, said, “I am worried that there is a fear that the Donghak ants will exit the stock market at once.” “It is KOSPI to resume short selling in a situation where the underlying problem of illegal short selling has not been resolved. “I will return it to a box ticket of 2000 units.”
Currently, there are messages on the bulletin board of the Korea Stock Investors Association calling for the resumption of short selling.
“We need to believe in the domestic financial market and boldly abolish short selling. Donghak ants are better than foreign institutional investors. Even if there are some side effects, it is deserved to abolish them because it is to protect Donghak ants.” (ID Juni*)
“Permanent abolition of short selling is the cornerstone of economic democratization, and the authorities are making a trick to reopen the short selling by supplementing the pretense system as a pretext for the overheating of the market.” (flo**), “Private investors against short selling are working together to abolish short selling. It is necessary to make a preparatory stage in which to announce that you will vote for the party and show it in action.
Stock prices “Selling short should be resumed to stabilize the overheated stock market”
(Photo = Getty Image Bank)
On the other hand, there are voices from the stock market that short selling should be resumed to stabilize the domestic stock market overheated by the Donghak ant fever.
Some point out that it is difficult to say that the ban on short selling greatly affected the rise of the KOSPI. Rather, it is an analysis that it is more positive that the liquidity that major country central banks actively gained to respond to Corona 19 has flowed into the stock market.
Hwang Se-woon, a research fellow at the Capital Markets Institute, said, “We evaluate the resumption of short selling as appropriate. In the bull market like this, it is rather reasonable to resume short selling so that the function can be normalized.”
Research Fellow Hwang predicted that even if short selling was resumed in a situation where the stock price is rising, the effect on the stock price will not be significant.
“We had two experiences of banning short selling in the past, and we have confirmed that there was little impact on the market at the time,” he said. “While short selling may be concentrated on some stocks, it is unlikely that short selling will be concentrated on large stocks. It is difficult to have a great influence on the index itself,” he stressed.
According to the industry, only two countries have blocked short selling in the world: Korea and Indonesia (indefinitely banned). The fact that it would be difficult for Korea to be included in the Morgan Stanley Capital International (MSCI) developed countries index without short selling puts weight on the resumption.
Bio companies, small and medium-cap stock volatility when short selling resumes↑
(Photo = Getty Image Bank)
In the financial investment industry, if short selling is resumed, bio and small and medium-sized companies with higher stock prices compared to their earnings are expected to be greatly affected.
Lee Jae-sun, a researcher at Hana Financial Investment, said, “In the case of large-cap KOSPI stocks, there will be little impact on the resumption of short selling because there are futures.”
Noh-gil, a researcher at NH Investment & Securities said, “Before and after the ban on short selling last year, the share price of the healthcare industry has risen significantly in the KOSDAQ market. Considering the share of bio and healthcare in the KOSDAQ market, the resumption of short selling will act as an important inflection point for the stock price. I can,” he explained.
Shinhan Investment Research Center predicted that if the ban on short selling is lifted, industries with weak fundamentals are likely to target, while industries with guaranteed profit growth will be relatively safe.
Representative stocks related to the K-New Deal policy, such as renewable energy, which will be in full swing this year. LG Chem(1,010,000 +1.00%), Samsung SDI(749,000 -0.66%), Hanwha Solutions(55,500 +0.91%) Etc. analyzed that earnings growth has been visible since last year and that the risk of earnings shock is limited as government policies are supported.
An industry official said, “To minimize market anxiety over the resumption of short selling, it is necessary to prepare supplementary measures such as strengthening the punishment for illegal short selling and allowing private short selling.”
Donghak ant fever is expected to continue this year. Securities prices are predicting a’high and low’ stock market trend this year, and they are forecast to continue a bullish market until the first quarter, before short selling resumes. The problem is that the phenomenon of’debt investment’ (investing in debt) is overheating.
According to the Financial Investment Association, the balance of credit transaction loans invested in debt was 20,787198 million won as of the 12th, an increase of 119.7% from the same period last year. It’s the highest ever.
The surge in credit loan balances is likely to act as a burden on the stock market in the future. Credit loan transactions are mostly short-term investment demand as they are due. The greater the balance, the greater the volatility. Although the rate of return increases in a bull market, losses in a bear market can also be maximized.
Therefore, caution is needed for stocks with a high credit loan balance ratio. According to the exchange, Sunny Electronics has a high credit balance ratio among KOSPI stocks.(4,760 -1.24%)‘(10.97%), Daesung Holdings(27,400 -1.08%)(10.64%), KC Cottrell(11,500 +0.88%)(10.45%), Hansol Homedeco(2,295 +1.10%)(10.24%), Yeonghwa Metal(2,410 +1.47%)(10.18%) and so on. In addition, it is advised that the portfolio should be re-examined as stocks that have had a high share price increase rate without any special good news or results may be targeted for short selling.
Eunji Cha, reporter Hankyung.com [email protected]