Korean retailers gather around Celltrion in case of short-sale attack

[Photo by Lee Seung-hwan]

Korean retailers are gathering around Korea’s leading bio stock Celltrion Inc., one of top foreign short-selling targets, to ready their version of battle with short sellers once the profit-taking investment tool through bet on stock price fall becomes normalized after a yearlong ban.

Shares of Celltrion finished 14.51 percent higher at 371,000 won ($332.5) on Monday while Kosdaq-listed two affiliates Celltrion Healthcare Co. and Celltrion Pharm Inc. closed 9.6 percent and 7.03 percent up each.

On Tuesday, shares of Celltrion ended down 4.18 percent at 355,500 won as retailers suddenly turned sellers.

The stocks were boosted on Monday after biosimliar maker’s autoimmune disease treatment Remsima SC gained marketing clearance in Canada. But the exceptional run suggested retail frenzy to build a defense front before short-selling is reintroduced, influenced by the mom-and-pop investors’ victory over hedge funds over GameStop in Wall Street.

According to data from Korea Exchange, Celltrion stands most vulnerable to short selling with 2.14 trillion won in the short balance as of Jan. 27. The stock is unmatched versus others with relatively fat balance in the short account - HLB (313.8 billion won), KMW (217.7 billion won), Netmarble (152.2 billion won), LG Display (148.2 billion won), Pearl Abyss (139.9 billion won), Hotel Shilla (106.2 billion won), and Doosan Infracore (92.8 billion won).

The number on its short balance is tantamount to 4.83 percent of its total market cap.

The surge in Celltrion shares come as the financial regulator is to push back normalization of short sale planned for March after a year-long ban to June for more fixes to the system

Mom-and-pop investors are emulating the offense strategy in the Wall Street against hedge funds.

Celltrion has been mentioned in the WallStreetBets, a popular Reddit forum, as the world’s second-largest short sale stock after Tesla to garner support for a short-squeeze campaign, a technique to defeat short sellers through excessive stock price gains.

The Stockholders Alliance in Korea on Monday vowed to act against short selling by creating K-Street Bets. But mimicking of the GameStop case could only stoke volatility in the domestic market, analysts warned.

Huh Jae-hwan, a strategist at Eugene Investment, said independent investors should take a more prudent approach on blind anti-short-selling investments.

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