Short sellers piled into Samsung Electronics (005930) even as the country's largest listed company moved ahead with a large shareholder return program. Analysts said the trades reflected market disappointment that the chipmaker announced share purchases for employee bonus payments without a cancellation plan, and that its returns program centers on dividends.
Short selling of Samsung Electronics shares totaled 1.02 trillion won ($734 million) on the 24th, the day the company began buying back stock, accounting for 8.81% of turnover, according to the Korea Exchange. That was 3.3 times the 2.70% daily average for the stock this year and the fourth-highest reading of the year. Short selling accounted for 4.46% of Samsung Electronics turnover on the 25th, again above the annual average.
Short selling has averaged 4.11% of daily turnover on the KOSPI this year, but the share rose to 5.20% in August, surpassing the previous high for the year of 4.87% in March. The ratio stayed above 6% for two straight sessions, at 6.21% on the 24th and 6.03% on the 25th, pointing to mounting bets on further declines.
SK hynix (000660), which drew praise for a buyback and cancellation plan worth about 40 trillion won ($28.8 billion), has also seen a relatively high level of short selling. The company began repurchasing shares on the 20th, and short selling ranged from 3.04% to 3.92% of turnover over the following four sessions, about 1.5 times its annual average of 2.41%.
Leverage indicators, which fell sharply along with the index in July, are also flashing warning signs again this month. Margin loan balances rose more than 5 trillion won, to 32.63 trillion won from 27.40 trillion won on the 4th, according to the Korea Financial Investment Association. A securities industry official said that with major overseas events such as the Jackson Hole meeting on the calendar, greater external volatility could combine with elevated short selling and forced selling triggered by collateral shortfalls to intensify downward pressure on the index.
