Korean short selling hits highest in over two years! But retail still maintains some risk appetite  

Due to AI valuation worries, Korean stocks plunged Wednesday (November 5), Thursday (6) industry data shows that day's short volume reached highest in over two years.  

Wednesday, Korea's benchmark KOSPI closed down over 2%, intraday once down over 6%, triggering KRX "Sidecar" mechanism, five-minute sell order pause.  

Per latest data jointly released by KRX and Yonhap Infomax, Wednesday total 1.97 trillion KRW (about $1.4 billion) stocks shorted, highest since July 26, 2023. Foreign investors 67% of total, institutions 32.1%.  

The short record over two years ago was caused by investors selling battery stocks in smaller KOSDAQ market, short volume then reached 2.4 trillion KRW.  

Short selling is investment strategy of borrowing securities to sell first, then buying back at lower price to return, short sellers profit from stock price drops.  

This strategy helps ease overheated markets, but critics say it can be predatory as it exacerbates market declines.  

November 2023, Korea temporarily banned short selling due to naked short (illegal short) worries, but late March this year allowed it again.  

For this massive short trading, Shinhan Securities analyst Lee Jae-won still optimistic, though foreign investors massive selling, retail investors continue buying, points out despite AI bubble issues, Korean domestic investors still maintain certain risk appetite.