LG Household & Health Care (051900.KS) was the most heavily shorted stock in Korea this year, with short selling accounting for more than 20% of its total trading volume as shares fell 15%.
Short selling, an investment strategy where investors borrow shares to sell in anticipation of price declines, typically exerts downward pressure on stock prices when concentrated in a particular stock. Other heavily shorted stocks this year included Hanjin Kal, LG Energy Solution and SK Innovation.
According to Korea Exchange data released on Dec. 31, LG Household & Health Care's short-selling ratio (excluding Nextrade) reached 20.79% this year. This means one in every five shares traded was a short-sale transaction—the highest ratio among all listed companies.
LG Household & Health Care closed at 258,500 won on Dec. 30, the year's final trading day, down 15.25% from 305,000 won at the end of last year. However, some market observers note that short selling may not be the primary cause of the stock's decline, pointing to the company's stagnant earnings even as K-beauty products gained global popularity.
"Short selling can have a negative impact on stock prices, but it's difficult to say it's the sole factor behind the decline," a securities industry official said. "Short sellers may have concentrated on this stock anticipating weakness due to poor earnings performance."
Other stocks with high short-selling ratios included Hanjin Kal (005380.KS) at 15.76%, LG Energy Solution (373220.KS) at 15.06% and SK Innovation (096770.KS) at 14.84%.
Hanjin Kal, ranked second in short-selling ratio, saw its stock surge nearly 65% from 75,400 won at the end of last year to 124,000 won at year-end, likely resulting in losses for short sellers. LG Energy Solution, ranked third, experienced a sharp decline in the fourth quarter.
S-1 (012750.KS) at 14.56%, Youngone Holdings (009970.KS) at 14.28%, Hite Jinro (000080.KS) at 14.01%, LG Display (034220.KS) at 13.80%, Hotel Shilla (008770.KS) at 13.41% and Dentium (145720.KS) at 12.90% also recorded high short-selling ratios.
