US short sale situation… Even after’ant judgement victory’, the aftermath continues

In the United States, the struggle between institutions and individual investors over short selling was concluded with an’ant decision victory’, but the post-storm continues. The U.S. Securities Supervisory Authority launched an investigation into a stock exchange company that partially restricted private investors’ transactions, and Elon Musk, Tesla CEO, expanded the wire to the cryptocurrency market. Wall Street’s famous short-selling investor who triggered the’GameStop’ situation surrendered, saying, “I will not issue a short-selling report again.”

US Securities Authority “Protect Individual Investors”

On the 29th (local time), the Securities and Exchange Commission (SEC), the US securities supervisory authority, issued a statement and said, “We are closely evaluating and monitoring the rapid fluctuations of certain stock trading prices over the past few days.” In addition, he said, “We will closely examine the actions of regulated institutions that may have disadvantaged investors or have excessively suppressed certain stock trading capabilities.” “Protect individual investors in the event of tampering transactions prohibited by the Federal Securities Act. ”Added.

This seems to be aimed at restricting the trading of stocks in GameStop, AMC Entertainment, and Blackberry by some companies, such as Robin Hood, a free stock exchange application (app). Recently, in the US, the stock price of the video game retailer’GameStop’ surged more than 100% as individual investors flocked to the stock. Since then, Robin Hood restricted individual investors from buying shares, and the stock price plummeted 44% in one day.

However, at the time, it was known that hedge funds and institutional investors were able to buy and sell, and criticism raised that it was unfair to allow hedge funds to trade stocks freely while ants only allowed to sell. The US politicians are also taking this issue and promoting the so-called’Game Stop Hearing’.

Musk expands into the cryptocurrency market

The war against the short selling forces is spreading to the cryptocurrency market. US electric vehicle company Tesla CEO Musk suddenly changed his Twitter account’s self-introduction column to’#Bitcoin’ and left a somewhat strange saying, “Looking back, it was inevitable.”

Foreign investors interpreted Musk’s tweet as a signal to buy bitcoin, and the price of bitcoin soared to $38,000 each (about 4,246 million won) in an instant. Reuters reported that “‘Pafarmusk’ is attracting bitcoin investors.” ‘Pafarmusk’ is a nickname that Musk is called by members of Reddit, an online stock forum that led the ant revolt in the US stock market. In response to the surge in bitcoin price, major cryptocurrency exchanges are known to have hurriedly liquidated the selling volume of $387 million (432.4 billion won) in order to prevent losses from short selling cryptocurrency investors.

Earlier, Musk caused a surge in stock prices by sending tweets mentioning gamestops, and directly attacked the hedge fund saying “short selling is a scam”, which means that Bitcoin also used a similar method to stir the market. Yahoo Finance said, “Musk may not have intended to liquidate the bitcoin short sale, but from his position, who did not hide his hatred for short selling, he may have burst a bottle of champagne after seeing the short sale massacre brought by his tweet.”

Short seller “I will guide you through the sales report”

Meanwhile, Andrew Left, CEO of Citron Research, the starting point of this situation, said through YouTube and Twitter that “we will not publish a short selling report anymore.” The announcement by Left Representative and Citron Research that they would give up short selling, which is their’major’, is a de facto declaration of surrender to ants. Citron Research decided instead to focus on recommending buying opportunities for investors. This means that it is helping to recommend a long (buy) position instead of short selling.

Representative Left, who has been betting on a certain stock price decline, recently announced a short sale for GameStop, which attracted backlash from individual investors. As angry ants intensively bought GameStop stocks, hedge funds investing in short-selling suffered tremendous losses. The CEO of Left, who called the ants “an angry crowd,” and assured that “GameStop stocks would drop rapidly to $20 per share” had to suffer a big loss by repurchasing the borrowed stock at a much higher price.

It is reported that the left representative even called the creator of the’Wall Streetbets’ forum to inform them that some investors, angry with the loss, threatened their children, and begged for “help”.

However, market analysis is that most of the short selling forces are still holding on despite astronomical losses. S3 Partners, a global financial information analysis company, announced that the total amount of short-selling GameStop shares reached $11.2 billion (about 12.5 trillion won). By total value, GameStop is the third most short-selling stock in the US by investors after Tesla and Apple. It means that some short selling companies, such as Citron Research, are pulling out of their feet, but most of the short selling forces are holding on. S3 Director Iho Dusaniski said, “According to the data, all short-selling stocks have not moved much.

Heo Gyeongju reporter [email protected]

News directly edited by the Hankook Ilbo can also be viewed on Naver.