Hanwha Aerospace's stock price has doubled this year alone. Export growth to Eastern Europe and the Middle East has led to record-high performance, and the order backlog has reached tens of trillions of won, but the stock price increase has been excessively steep.
The shipbuilding industry is similarly affected, including HD Korea Shipbuilding & Offshore Engineering and Hanwha Ocean. U.S. President Donald Trump singled out Korean shipbuilders to discuss cooperation, and as actual orders increase, performance improvements are expected, but the current stock prices are too high. Samyang Foods, whose stock price rose from 170,000 won a year ago to the current level of 900,000 won, is a notable example.
Moreover, stock prices cannot be explained solely by business outlooks and performance. When stock prices surge, many investors want to cash in their profits, and if they sell their shares, the stock price is bound to fall.
However, one does not realize this when stock prices are rising rapidly. A correction inevitably follows any sharp rise.
The criticism of the 'tilted playing field' and concerns about whether the government’s measures have really leveled the playing field persist, but short selling serves to adjust the illusion that stock prices will forever rise. Short selling will resume on the 31st of next month.
Stocks that have risen too much will likely be targets of short selling. LS Securities identified the stocks likely to be targeted for short selling: Samyang Foods, Doosan, LS ELECTRIC, Hanwha Aerospace, Sam Chun Dang Pharm, Nature Cell, SKC, DOUZONE, Yuhan Corporation, Korea Zinc, ISU PETASYS, KD Navien, SK hynix, Samsung Heavy Industries, Samsung Fire & Marine Insurance, HD Hyundai Mipo, DN AUTOMOTIVE, Hyundai Elevator, Hanwha, and HD Korea Shipbuilding & Offshore Engineering.
If you hold these stocks, it is advised that you consider selling before short selling resumes, as concerns over tariffs are resurfacing and Trump has hinted at cuts in the federal budget. Recently, stocks that surged have corrected on the 20th, which also means it might not be wise to consider this a buying opportunity.
However, simply clearing stocks that surged before the banned short selling resumes would be a half-hearted investment strategy. While some stocks will certainly face corrections once short selling begins, a positive impact on the stock market is also expected.
There is a high possibility of foreign investors' buying influx. JUNGDAWN, a researcher from LS Securities, noted, "The market participation of foreigners, which decreased during the short selling ban, will recover again," emphasizing, "This has been confirmed at the resumption points after the past three short selling bans."