2015. 12. 10 Securities lending and short selling Securities lending: Securities lending balances (SLBs) in the Kospi and Kosdaq have both fallen since December amid stock market declines. Such declines are a year-end phenomenon attributable to growing SLB repayment pressure ahead of year-end dividends, the end of corporate fiscal years, and the closing of shareholder registry. The SLB for Kospi large caps has fallen to end-2014 levels, while that for Kospi mid-caps has fallen to a six-month low. The SLB for Kosdaq large caps has also declined to a three-month low, though it remains high in absolute terms due to a surge since the beginning of the year (Its ytd high is 177,000 shares, up 20% from 147,000 shares at the beginning of the year). In the Kospi and Kosdaq, SLB as a percentage of market cap has reversed course and trended down in December due mainly to the year-end effect. Among the sectors which saw steep rises in SLB ratio, healthcare’s ratio has held up relatively well. Meanwhile, shorting as a percentage of trading volume has surged in the financials sector, while it has trended down in the industrial goods sector. Top stocks in securities lending and short interest: Stocks with the highest absolute short interest include Korea Aerospace Industries, Hyundai Motor, and Daewoo International among Kospi large caps; SKC, Halla Holdings, and AK Holdings among Kospi mid-caps; and Kolmar BNH, Green Cross Cell, and Genexine among Kosdaq large caps. Stocks with large increases in lending include E-mart, BGF Retail, and LG Household & Healthcare among Kospi large caps; Duzon, Hanwha General Insurance, and Cuckoo Electronics among Kospi mid-caps; and Amicogen, Com2us, and CJ E&M among Kosdaq large caps. Stocks under high short-term SLB repayment pressure include Daelim Industrial, CJ Korea Express, and Hankook Tire Worldwide among Kospi large caps; Samjin Pharm, Meritz Group, and Mando among Kospi mid-caps; and Korea Information and Communication, Actoz Soft, and Humax among Kosdaq large caps. Stocks that have seen their SLB as a percentage of free float hit a three-year high this month include Lotte Confectionery and Toray Chemical Korea. Stocks with highest levels of short selling, by market (Dec 9) (Shares) Stock Short interest indicators Institutional net buying** Short selling*SLB*Domestic ForeignKospi large caps LG Display 271,875 358,047 700,804 5,899,568 BNK Financial group 252,058 3,683,806 (10,703,111) (4,158,062)SK Networks 222,185 202,239 (9,166,084)63,038 Doosan Infracore 214,369 635,942 2,822,550 (3,712,103)Samsung Heavy Industries 183,048 540,723 (2,549,784)(13,703)Kospi mid-caps Hyundai Merchant Marine 323,222 966,510 (4,371,253)(7,792,278)Hanjin Shipping 118,481 417,354 (14,720)(161,958)Meritz Securities 78,055 98,165 (4,510,209)1,368,447 JB Financial Group 51,220 115,848 (68,127)(1,428,785)Kumho Tire 50,942 176,040 323,434 (1,092,872)Kosdaq 100 Seoul Semiconductor 88,972 190,045 (906,777)435,034 Wonik IPS 75,642 109,661 1,489,687 (1,385,907)Paradise 65,038 142,742 (637,122) (1,049,230)Celltrion 55,193 231,495 1,277,525 110,936 Korea Real Estate Investment Trust 40,033 92,619 (5,820,166)(435,344) Note: * 20-day moving averages ** Over past 20 days Source: KRX, Samsung Securities Short Matrix 2015. 12. 10 2 Securities lending and short selling Securities lending balances Kospi large caps: SLB trends (KRWb) Maximum MinimumAverage3 months 32,202 29,161 30,938 6 months 33,851 29,161 31,435 1 year 36,270 28,507 32,447 3 years 36,270 21,162 31,945 Current 29,257 Note: As of Dec 9 Source: KRX, Samsung Securities Kospi large caps: SLB vs index performance Source: KRX Kospi large caps: SLB relative to market cap (KRWb) Maximum MinimumAverage3 months 3.60 3.20 3.34 6 months 3.62 3.20 3.40 1 year 3.71 3.19 3.47 3 years 3.85 2.24 3.42 Current 3.21 Note: As of Dec 9 Source: KRX, Samsung Securities Kospi large caps: SLB relative to market cap Source: KRX 8001,0001,2001,4001,6001,8002,0002,2002,4000510152025303540Jan 07 Aug 08 Mar 10 Oct 11 Jun 13 Jan 15SLB (LHS)Index (RHS)(KRWt)(Pt)8001,0001,2001,4001,6001,8002,0002,2002,4000.01.02.03.04.05.06.07.0Jan 07 Aug 08 Mar 10 Oct 11 Jun 13 Jan 15SLB relative to market cap (LHS)Index (RHS)(%)(Pt) Short Matrix 2015. 12. 10 3 Kospi mid-caps: SLB vs index performance Kospi mid-caps: SLB relative to market cap Kospi mid-caps: SLB trends (KRWb) Maximum MinimumAverage3 months 11,572 9,399 10,586 6 months 11,572 9,399 10,684 1 year 11,572 5,441 9,200 3 years 11,572 2,495 6,474 Current 9,399 Note: As of Dec 9 Source: KRX, Samsung Securities Kospi mid-caps: SLB relative to market cap (KRWb) MaximumMinimumAverage 3 months 5.92 5.22 5.61 6 months 5.92 4.96 5.51 1 year 5.92 3.62 5.01 3 years 5.92 1.99 4.09