Samsung Electronics Short Selling Hits ₩1 Trillion: Market Leader Rotation and Investment Strategy

Samsung Electronics' stock saw a concentrated ₩1 trillion in short selling as it dropped 9% on Monday. This is mainly attributed to disappointment selling following the announcement of shareholder return policies last Friday, which fell short of market expectations. The decline was further exacerbated by short selling volumes from speculative forces.

The U.S. Treasury Secretary sent a positive signal to the market by suggesting that policies could be enacted to guide long-term interest rates lower. This statement led to various interpretations, including the possibility of using the General Account to purchase Treasury bonds, and is widely perceived as a calming signal to the market.

Hwang Yu-hyun, Team Head, stated, "It's actually, well, the general account could be used for purchases. It's essentially the same, isn't it? It's a 'light cue,' as we say, but at any rate, they've started to indicate that some cards might be played."

Samsung Electronics and SK Hynix are securing downside rigidity in their stock prices due to a steady inflow of demand based on dividend yields. SK Hynix, in particular, is actively boosting its stock price through direct share cancellations and buybacks. These actions, coupled with short-covering volumes, serve to strengthen the stock's lower boundary.

Hwang Yu-hyun, Team Head, explained, "For Samsung Electronics and SK Hynix, the lower end is quite firmly protected. Demand based on dividend yields can come in at any time, and Hynix is directly buying back its own shares. That's the current situation."

Recently, other corporate entities have attracted market attention by recording over ₩1 trillion in net buying for consecutive days. Their buying spree is interpreted as more than simple stock price defense; it sends a strong warning to short sellers to 'not shake the leverage'. This share buyback by other corporate entities, combined with short covering and financial investment buying, plays a crucial role in driving index growth.

Hwang Yu-hyun, Team Head, stated, "The most reliable factor recently is other corporate entities. Today, other corporate entities bought ₩1.6 trillion. Don't these corporate share buybacks also act as a signal to short sellers, telling them not to mess with our leverage?"

The outstanding balance of ETF leverage still exceeds ₩6 trillion, indicating high market volatility. It is expected that market volatility will only ease when this balance falls below ₩5 trillion.

Hwang Yu-hyun, Team Head, mentioned, "The outstanding balance for ETF leverage is still high. If you check today, it's likely still around ₩6 trillion."

As of the 21st, it was confirmed that margin calls on credit balances occurred at 4.4%. This indicates that market aftershocks are still ongoing even after the sharp decline in July.

Hwang Yu-hyun, Team Head, stated, "Uh, margin calls on credit balances also came out at 4.4%."

Guest Seo Su-jin revealed she purchased SK Square at ₩1,990,000, demonstrating the risks of FOMO-driven chase buying. She approached it as an alternative investment to SK Hynix but later faced difficulties as the stock price declined. This suggests that misguided investment decisions amid market concentration can lead to significant losses.

Guest Seo Su-jin explained the situation at the time, saying, "I entered at the 1,990,000 level... I entered at the 1,990,000 level, but actually yesterday... It was June 23rd, and I bought it at ₩1,990,000?"

An analysis suggests that unlike in the past, it is now difficult to expect synchronization between SK Hynix and SK Square beyond their equity relationship. Experts believe that the strong direct buying of SK Hynix by institutions and foreigners recently has lowered the probability of the two stocks moving in tandem, as they did in June and July. It's important to recognize that SK Square's equity structure as a subsidiary of SK Hynix does not directly translate into linked stock price movements.

Hwang Yu-hyun, Team Head, assessed, "I believe the probability of Hynix and Square pairing up like they did in June and July has somewhat decreased."

The concentration phenomenon in stocks unrelated to core businesses, such as SK Square, is pointed out as a systemic problem that inflicts massive losses on individual investors. The situation where individuals end up holding the bag after chasing buying without any basis during stock surges is repeatedly occurring.

Hwang Yu-hyun, Team Head, criticized, "Stocks like SK Square, which are unrelated, no matter how you look at it, but the stock price surges and individuals end up holding all the shares."

The Korean stock market is characterized by strong concentration, so a vague long-term investment strategy of simply "waiting it out will lead to a rise" has its limitations. Hwang Yu-hyun, Team Head, emphasized the importance of a realistic judgment, stating that blindly holding on is merely wishful thinking.

Hwang Yu-hyun, Team Head, pointed out, "I don't want to give you false hope by saying that if you wait, it will go up, and that you should just do long-term investing."

A practical response strategy is needed for underwater stocks. If you held ten shares and bought three more at the bottom, then during a rise, you should sell at least those three additional shares to realize profits and increase your net assets.

Hwang Yu-hyun, Team Head, suggested a specific response method: "If I had ten shares and bought three more at the bottom. Then I would sell just those three shares... Anyway, your net assets would have increased by the amount it rose from the bottom. Let's take that out first."

Recently, the market has shown signs of re-aligning from a semiconductor-centric focus to sector diversification. As the shift in market leadership accelerates due to the ETF leverage effect, stocks that are hitting new highs, not new lows, have started to emerge in sectors such as secondary batteries, materials-parts-equipment (sobu-jang), and cosmetics.

Hwang Yu-hyun, Team Head, explained the market change: "Now, the market is definitely diversified... new high-hitting stocks have started to appear in sectors like secondary batteries, semiconductors, sobu-jang, and cosmetics."

Goodai Global, the parent company of the cosmetics brand TIRTIR, started as a one-person enterprise and is now valued at approximately ₩4 trillion. The company, founded by a representative born in 1987 with ₩50 million, aims for an IPO next year and owns several production subsidiaries, including TIRTIR.

Hwang Yu-hyun, Team Head, revealed, "There's a company called Goodai Global. It's a one-person company. The CEO was probably born in '87 or so. They started with ₩50 million, and I believe they're now valued at about ₩4 trillion. I understand they're planning an IPO next year, and TIRTIR, which you might have heard of, and all its production subsidiaries are under it."

Last week, Samsung SDI announced the sale of its display stake, securing substantial funds. The secured funds are expected to be used for CAPEX (capital expenditure) investments and shareholder returns. In particular, the possibility of investing in an all-solid-state battery factory in the U.S., based on strong performance, is being mentioned, raising expectations for securing future growth engines.

Hwang Yu-hyun, Team Head, stated, "Last week, Samsung SDI announced an equity sale. They'll have cash... of course, it's for CAPEX. Everyone is just waiting for shareholder returns, assuming all companies are diligently pursuing them. They can do it this time since performance was good. They'll use that money to build a factory in the U.S. to control all-solid-state batteries."

Hwang Yu-hyun, Team Head, emphasized that a combined 50% of the portfolio should still be allocated to large-cap semiconductor stocks and materials-parts-equipment (sobu-jang). This is because market concentration can occur at any time. However, he advised against indiscriminately increasing allocations to other sectors, instead advocating for a focused strategy of moving "only within the ones that are performing." Particular caution is required when trading certain sectors like cosmetics.

Hwang Yu-hyun, Team Head, stressed, "I believe that 50% of the portfolio should still be allocated to large-cap semiconductor stocks and sobu-jang combined. There can always be a concentration, like last week, whenever there's an issue. On the other hand, you shouldn't spread your portfolio too thin across other sectors. You should only operate within the ones that are performing."

The recent sharp decline in Samsung Electronics and SK Hynix is interpreted as an irrational phenomenon that goes beyond the scope of general market analysis. The current market is judged to be in an abnormal state where basic mechanisms are not functioning. In such a situation, using leverage to buy because the stock price has fallen is very risky, and it is crucial to hold cash to prepare for market volatility.

Hwang Yu-hyun, Team Head, warned, "The current sharp drop in Samsung Electronics and SK Hynix is actually a bit strange. I think so. There's something we don't know, as we discussed then. This is a market where mechanisms aren't working at all, and if you use margin to buy because it's dropped, thinking it's an opportunity, it's dangerous."