SK Hynix Sees Record Short Selling Amid Stock Surge

While SK Hynix's stock price continues its upward trajectory, short selling, betting on a price decline, has reached a record high, signaling divided investor sentiment. This suggests a combination of optimism about SK Hynix's stock performance and a belief that the current stock price is overvalued. On November 3rd, SK Hynix's stock price surpassed 600,000 won for the first time ever. Simultaneously, short selling balances also reached a record high, increasing uncertainty about the future direction of the stock. SK Hynix's stock price soared by over 60% in October alone, with a year-to-date increase exceeding 250%. This surge is attributed to expectations of a recovery in the semiconductor industry and a strengthened competitive edge in the artificial intelligence (AI) semiconductor market. In particular, the company's leading role in the High Bandwidth Memory (HBM) market has garnered positive evaluations from investors. In contrast to the rising stock price, short selling activity on SK Hynix has steadily increased. Short Interest Exceeds ₩1 Trillion and Continues to Rise. SK Hynix's short interest first surpassed ₩1 trillion last month on the 20th, ballooning to ₩1.5 trillion by the 28th. The average short interest in SK Hynix for the month of October was estimated to be ₩844.3 billion. Short selling is an investment strategy that profits from an anticipated stock price decline. It involves borrowing shares to sell, and then buying them back at a lower price when the price falls to return to the lender. The increase in short selling on SK Hynix indicates a growing number of investors who believe the current stock price is excessively high in the short term. There are varying interpretations of the increase in short selling on SK Hynix in the stock market. Some analysts believe that it is due to increased profit-taking following the recent surge in stock price. This suggests a strategy of selling at a high point and then repurchasing at a lower price to secure profits, anticipating a short-term price correction. Others argue that it is a result of increased investors betting on a price decline due to concerns about SK Hynix's fundamentals. This implies that some investors are factoring in uncertainties about future earnings or the possibility of increased competition and are investing in a decline. Samsung Electronics, also considered a semiconductor 'top two' company along with SK Hynix, saw its stock price rise by over 28% in October. Samsung Electronics Sees Short Selling Decrease After Reaching ₩100,000 Milestone. In contrast to SK Hynix, short interest in Samsung Electronics decreased to around ₩50 billion, half its previous level, after its stock price broke the ₩100,000 mark on the 27th. The decrease in short selling on Samsung Electronics despite the stock price increase suggests a different dynamic than SK Hynix. This is attributed to the market's confidence in Samsung Electronics' robust performance and fundamentals. The fact that numerous securities firms have raised their target stock price for Samsung Electronics, presenting a positive outlook, has also influenced the decline in short selling. A semiconductor industry insider explained, "Samsung Electronics is evaluated as being able to achieve stable growth because it has a diverse business portfolio, including not only memory semiconductors but also foundry and system LSI." The securities industry is closely monitoring whether SK Hynix's stock price will continue to rise or if it will shift to a downward trend due to pressure from short sellers. There is a forecast that stock price volatility could increase, particularly given that SK Hynix's short interest has surpassed ₩1 trillion. SK Hynix is scheduled to announce its earnings and future business strategy in November. This announcement is expected to be a crucial variable in the direction of the stock price. The key will be whether the company can maintain its competitive advantage in the High Bandwidth Memory (HBM) market and present a vision for the development of next-generation memory technologies. Investor sentiment may change depending on SK Hynix's earnings and business strategy announcements, which could affect the movement of short sellers. A positive earnings announcement along with a concrete growth strategy could lead to a continued rise in the stock price. Conversely, if earnings fall short of market expectations or an uncertain business outlook is presented, short selling pressure could intensify. SK Hynix plans to hold investor relations (IR) events and actively communicate with the market to properly value the company and restore investor confidence. The IR events are expected to provide detailed explanations of the company's performance, business strategy, and future growth drivers. SK Hynix is scheduled to announce its earnings and future business strategy in November. Investors need to carefully analyze SK Hynix's announcements and market reactions to make investment decisions.