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[뉴욕=이데일리 김정남 특파원] It was a week of upheaval. As the unprecedented’war of luck’ between individual investors and hedge funds intensified, Gamestop’s stock price soared 400% over five trading days. As the second and third game stops continued, the whole of Wall Street was trembling.
Eyes are drawn to this week. As it is known that additional short selling by hedge funds for Gamestop is lined up, concerns arise that extreme volatility caused by overheated stocks will continue. Some analysts say that if the game stop situation is prolonged, investor sentiment across the New York stock market may worsen. It is said that the risk of overheating the existing stock market could be greatly approached by an unexpected shock.
Gamestop soaring 400% in a week
According to Market Point on the 30th (local time), Gamestop’s stock price soared 399.92% (65.01 USD → 325.00 USD) for 5 trading days since the 25th. At one time, due to the remaining amount of short selling compared to the amount of stock in circulation, which exceeded 140%, it became the target of ants grouped around the online community Reddit’s’Wall Street Betz’ discussion room, and embarrassed short selling hedge funds short squeeze (investors who sold short stock prices skyrocket) When it comes to buying stocks to reduce losses), the stock price soared to the ceiling.
It’s not just a game stop. The share price of movie theater chain AMC surged 277.78% ($3.51 → $13.26) last week. Even though movie theaters are struggling since Corona 19, the stock price soared. According to Kipringer, a financial information company, AMC’s share of short selling was close to 38% as of the 29th. Despite a slight decline due to ants attack, it still showed a high proportion of nearly 40%. In addition, some sports such as Express ($1.79→$6.00, 235.20%) and Regand Pharmaceuticals ($142.62→$185.35, 29.96%) suffered extreme roller coasters for the same reason as Game Stop.
The problem is that we don’t know where the war between ants and hedge funds is now. According to market research firm S3 Partners, last week’s gamestop short sale amount decreased by only 8%.
This is different from the observation that short-selling hedge funds were unable to withstand and liquidated their short positions after suffering huge losses due to the surge in game stop stock prices. Melvin Capital and Citron Research have ended their short selling positions, but it means that other hedge funds are further short selling. Iho Dusaniski, managing director of S3 Partners, said, “The majority of them have covered short gamestop positions, but that’s not true.”
According to S3 Partners, the interest rate for borrowing stocks to sell new shorts is 50%. Even though the interest rate is abnormally high, the stock price of GameStop is ridiculously high, so the demand for short selling continues. This means that the nerve war between ants and hedge funds will continue for some time.
“Game stop, concerns about rising stock market anxiety”
The biggest concern is the aftermath of uncertainty on the game stop on the overall stock price. Last week, the Dow Jones 30 Industrial Average fell 3.27%, recording 29,9982.62, breaking the 20,000 line. The Standard & Poor’s (S&P) 500 Index and the Nasdaq Index fell 3.31% and 3.49%, respectively.
According to inside and outside Wall Street, large-scale asset managers are known to be still watching the game stop situation. In some, the atmosphere of seeing it as’stock market bitcoin’ is perceived. A member of the Wall Street financial company said, “It seems a little early to predict the stock market shock due to the weekly drop of around 3%.” “It is possible only when large institutional investors move.”
Still, there are variables. In Wall Street, concerns over a stock market bubble grew sharply before the game stop crisis. For example, the S&P index, which showed 3300 units in October last year, climbed to the 3700 line through November and December of last year, and broke the 3800 line in the new year, despite growing concerns about the re-proliferation of Corona 19 without any good news. In the midst of growing concerns about the bubble, a completely unexpected game stop occurred, and the shock wave is approaching even bigger. This is why short-term correction prospects have recently increased, centering on major investment banks (IBs).
“The decisive battle between the ant army and the short-sell hedge fund (along with concerns over inflation boomerangs) could raise another sense of insecurity,” said Michael Hartnet’s chief strategist at Bank of America (BoA), warning that the moderator is approaching.