“Who the hell are you?”… The short selling of the ants’public enemy’ was also uncovered.

The resumption of short selling in March is being argued not only by ant investors but also by the financial authorities.

During the period when short selling was banned, the Korean stock market showed remarkable results, arguing that “short selling should be extended further” and objections that “we need to see the net function of short selling” are in the face of opposition. Short selling has emerged as one of the hottest issues in the Korean stock market as opposition politicians have joined the debate.

What kind of investor does the’short selling force’, which Donghak ants point to as the’public enemy’, mean?

On the 17th, Maekyung.com analyzed the KRX short selling portal, and found that short selling immediately before the ban on short selling due to the corona crisis last year was actually the exclusive property of foreign investors.

Until the temporary short selling ban was enforced in March last year, more than half of short selling traded in the domestic stock market was made through foreign securities companies such as Morgan Stanley International PLC, Merrill Lynch International, Credit Swiss Security Europe LTD, and Goldman Sachs International.

It is not possible to know specifically who the investor buys and sells through foreign securities companies. However, it is known that foreigners such as European hedge funds and global pension funds dominate.

Until March 13, when the Financial Services Commission announced a six-month ban on short selling, the transaction value of short selling in the domestic stock market last year was KRW 32,708,3 billion. KOSPI totaled 24,956.8 billion won and KOSDAQ 7,751.4 billion won.

Among them, foreign short selling transactions amounted to 18.18 trillion won, accounting for 55.1% of the total, while institutions accounted for 14.30 trillion won (43.7%). Individuals’ short selling transaction amount was 389.2 billion won, only 1.2% of the total. In terms of short selling amount alone, it is not unreasonable for individual investors to argue that it is a slanted playground.

Foreigners actively conducted short selling not only in the KOSPI but also in the KOSDAQ market, which is centered on small and medium-cap stocks. In the case of the KOSPI market, 50.0% of the total transaction value was institutional and 49.2% were foreigners. On the other hand, on the KOSDAQ, foreigners accounted for 73.9% and institutions accounted for only 23.6%.

Foreigners sharply increased their short selling deals in February and March, when the stock market collapsed last year due to the new coronavirus infection (Corona 19). The transaction price of foreigners’ short selling in January last year was 5.84 trillion won, but in February, when corona 19 patients occurred in earnest in Korea, the amount increased by nearly 2 trillion won to 7.411.2 billion won.

After that, even in March, when the bearish market was accelerating, it recorded a short selling amount of 4.76 trillion won until the 13th. During this period, the KOSPI plunged from 2250 points to the 1430 line. Short selling is a structure that gains profit as the stock price falls. It is estimated that foreign investors who have made a lot of short selling have made up for the loss of the stock price plunge by short selling.

There are many foreign brokerage firms looking at the people subject to disclosure under the short sale balance disclosure system.

Of the 7387 cases announced in the KOSPI market before the ban on short selling last year, Morgan Stanley was the highest with 2215 cases, Merrill Lynch (1264 cases), Credit Suisse (1172 cases), Goldman Sachs (633 cases), UBSA (435 cases), JP Morgan (433 cases), etc. In the KOSDAQ market, Morgan Stanley accounted for nearly half of the total 17,069 cases with 5,916 cases. Merrill Lynch (2955 cases), Credit Suisse (2577 cases), Goldman Sachs (1571 cases), JP Morgan (1364 cases), and UBS Major foreign investors, such as Euge (1073 cases), ranked in the rankings.

Looking at Helixmiss, which had the highest share of short selling balances at 13.59% until the day before the ban on short selling last year, the mass holders reported to the exchange were Merrill Lynch, Morgan Stanley, Barclays Capital Securities Co., Citigroup Global Market Limited, UBSA, and Credit Suisse. Foreign securities firms, such as those, stood out. HLB, KM Double U (10.73%), and Shillagen (9.48%), which accounted for 12.20% of the balance, were also listed as mass holders by foreign securities companies.

On the other hand, it has been steadily pointed out that short selling is an unfair trade and a slanted playground despite the net function of forming an appropriate price.

This is because individual investors have very little access to short selling compared to foreign or institutional investors. Accordingly, there is a strong voice that short selling should be abolished, centering on individual investors. However, the financial authorities have repeatedly stated that the temporary ban on short selling will end on March 15 as scheduled.

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