South Korea’s stock market rebounds but short selling volume surges as chip outlook remains uncertain

(1) Although the South Korean stock market has rebounded sharply from the turmoil triggered by the plunge in chip and AI-related stocks—with the KOSPI index rising 6% so far this month and the KOSDAQ index surging 20%—the scale of stock short selling continues to rise. (2) According to data from the Korea Exchange, as of this Tuesday, outstanding short positions stood at approximately 19 trillion won (about $13.4 billion), an increase of 2.27 trillion won (up 14%) from 16.73 trillion won at the end of last month; previously, it was 15 trillion won at the end of February, dropped to 12 trillion won in early March, and once climbed to 23 trillion won in early June. (3) Last month, the market suffered a steep decline due to concerns over deteriorating AI investment prospects and shrinking chip demand, but after this rapid rebound, investors remain cautious and are uncertain whether the chip sector has peaked.