There are several drivers behind the KOSPI’s surpassing 3000. Many individual investors look for the cause of the short selling ban. This is because the stock market has shown an unprecedented rise since March last year, when short selling was banned.
Graphic = Reporter Hur Rami [email protected]
There is a heated debate over whether to resume short selling in March. Many individuals think that’short selling = plunging stock market’. There are also many people who feel fear. Market experts say that once you know how to use short selling, you don’t have to worry too much. It is advised that you should do a’tweezer investment’ to select prospects while avoiding stocks that tend to sell short.
Differentiating stock prices even in the same industry
When short selling resumes, large-cap stocks are expected to engage in long-short strategies within the industry. It is a way to buy stocks that are expected to rise further within the sector and short sell stocks that are likely to show relatively poor performance. Samsung(88,000 -1.90%)SK hynix(127,500 -2.30%)It’s like selling shortly to make a profit.
Experts predict that short selling using differentiation between industries will also increase. There is also a prospect that short selling will be concentrated in sluggish sectors. This is because, unlike last year, when circulating sales between industries appeared, the market is expected to unfold based on earnings this year.
Even if it is a promising industry, it is explained that if the stock price rises excessively, it can be a target for short selling. The performance, prospects, and materials of individual stocks should be examined more closely. One analyst said, “It is important to look at valuation indicators such as PER and PBR and short-term surges, as well as performance within the industry.”
Shinhan Investment Corp. advised that it should pay attention to sectors and stocks that have structural growth. Rechargeable batteries, solar power, wind power, and new renewable energy were selected as promising industries. Individual stocks to avoid short selling include Samsung Electronics, Hyundai Motors, and LG Chem.(979,000 -3.07%), Samsung SDI(737,000 -1.60%), Hanwha Solutions(55,400 -0.18%)Recommended.
It is necessary to look at the stocks where short selling was concentrated in the past. This is because short selling investors can understand what type of stock they prefer.
As a result of a survey of stocks that had a high proportion of short selling by year (short selling/transaction volume), short selling was found in stocks with high valuations or declined business conditions. Netmarble in 2018 and 2019(124,000 -1.98%), Celltrion(329,000 -6.67%), Hanon System(17,200 -3.64%)All of these were also on the list of’Top 10′ short selling. These are all stocks that have been pointed out that they have high PERs within the industry. LG Display(21,050 -2.09%)And Doosan Heavy Industries & Construction(13,550 -2.52%)Also, the share of short selling in 2018 and 2019 reached 15%. The two stocks have in common that their earnings have been sluggish for a long time due to the deteriorating industry conditions.
However, there are many analyzes that short selling is not easy for stocks with high growth expectations as structural industrial changes appear rapidly after Corona 19. Representative stocks are Samsung Electronics and Hyundai Motors.(240,000 -4.19%)All. The valuation has increased due to a short-term surge, but growth potential is also attracting more attention. A representative of an asset management company said, “Samsung Electronics and Hyundai Motors are not easy to sell short.” “If the stock price surges when selling short, the loss is infinite.”
If there are many low-cost CBs, target short selling
In the KOSDAQ market, there is a high possibility that short selling will be concentrated on stocks with many convertible bonds (CB) issuances. This is because such stocks can use the’delta method’ to determine profits through short selling.
For example, if the stock conversion price is 30,000 won and the stock price rises to 100,000 won, the company borrows stocks, sells it short for 100,000 won, and later converts the bonds into stocks and pays them back. Then, the profit of 70,000 won can be secured immediately. A hedge fund official said, “If you sell short, you can determine your profits without waiting for the CB repayment period. If the stock price falls after the short sale, you can collect additional profits for the difference.”
As a result of a thorough survey of the stocks included in the KOSDAQ 150, it was found that about 10 stocks were relatively vulnerable to short selling. These are stocks that have a high CB ratio to market capitalization and have a stock price above the conversion price. It is analyzed that such stocks have a great incentive for CB holders to use short selling.
Medipost(38,000 -0.52%)Is representative. As of the 14th, Medipost had 29.3 billion won in CB. Its proportion to the market cap is 4.91%. The stock price is 38,000 won, which is 17.5% higher than the conversion price (32,490 won). Shinheung SEE(51,500 -2.65%)Also, it is a stock that is vulnerable to short selling. Although the proportion of CB to market cap is 4.56%, the stock price is 36% higher than the conversion price (38,875 won) at 51,500 won. Green cross cell(49,350 -0.50%)In addition, the stock price has soared as there are many CBs.
Huzel and Hyundai Bio(24,600 -4.09%)Although the share of CB is 2~3%, the share price is nearly twice that of conversion. If you sell shortly, you can earn twice the amount of your investment. Huzel’s share price is 21,6900 won, but the conversion price is 12,4800 won. Hyundai Bio’s conversion price is less than half of the stock price.
Reporter Park Uimyung [email protected]