KOSPI short sale balance surpasses 9 trillion... Increased by 131% in 3 months, also noted as a rebound signal

The short-selling balance in the KOSPI market exceeded 9 trillion Won, reaching a record high since the full resumption of short selling last March. According to the Korea Exchange, as of July 9th, the short-selling net holding balance in the securities market was 9 trillion 445 billion Won, a significant increase of 131% in three months from 3 trillion 915.6 billion Won on March 31st.

The short-selling net holding balance refers to the quantity of borrowed stocks sold but not yet repaid, reflecting an investment sentiment that usually expects the market to fall. The sharp increase in the short-selling balance indicates that the market's cautionary sentiment remains strong.

The stocks especially targeted were SKC (short-selling share 5.55%) and Hanmi Semiconductor (4.92%), Shinsung E&G, Hotel Shilla, Dongbang, Doosan Fuel Cell, Hanwha Vision, with most semiconductor and secondary battery-related stocks taking the top spots. In KOSDAQ, Jay Electric (4.70%), VT, Danal, Jeju Semiconductor, Nature Cell, EcoPro BM recorded high short-selling shares.

This surge in short-selling balance is interpreted as positioning to prepare for potential technical adjustments of the KOSPI, which has risen for 11 consecutive weeks out of the past 13 weeks. However, some in the market are focusing on the possibility of turning to 'short covering'. This is because the uncertainty of tariffs stemming from the US is entering a resolution phase, and with the Bank of Korea's interest rate cuts, supplementary budget formulation, and government stock market stimulation measures, the possibility of foreign funds re-entering the market has increased.

Byun Jun-ho, a researcher at IBK Investment & Securities, said, “Currently, the domestic stock market is aligning the three factors of policy, finance, and sentiment,” and predicted that the positive trend could continue in the second half following the rally in the first half.

The increase in short-selling balance could be a signal for short-term adjustments, but it is sharpening investors' attention as it could become a platform for a rebound thereafter.