The Korean Stock Exchange KOSPI Index has rallied +58% in 2026 and +32% over the last thirty days but short sellers have been active during this rally. Total S. Korean short interest has risen to $20.4 billion with $1.7 billion of new short selling over the last thirty days.

Short Rotation

The vast majority of new short selling occurred in the Industrials sector with $1.7 billion of new short selling over the last thirty days.

The most shorted stocks in the Industrials sector were shipbuilder HD Hyundai Heavy Industries (329180 KS), specialty chemical producer Ecopro Co Ltd (086520 KS), electrical machinery manufacturer HD Hyundai Electric (267260 KS) and shipbuilder HD Hyundai Marine Solution (443060 KS).

Two other sectors with increased short selling were the Communications sector (Hybe Co Ltd 352820 KS) and the Consumer Staples sector (Samyang Foods 003230 KS).

There were two sectors with short covering. The Materials sector (Kolon Industries 120110 KS) and Energy sector (SK Innovation Co Ltd 096770 KS) both had just over $100 million of short covering.

Largest S. Korean Shorts

The largest S. Korean shorts are: Hyundai Motor Co (05380 KS), Hanmi Semiconductor (042700 KS), Hyundai Heavy Industries (329180 KS) and LG Energy Solution (373220 KS). Half of all new short selling is in the Industrial and Information Technology sectors.

Short Selling & Short Covering

Almost two thirds of S. Korean stocks had increased short selling over the last thirty days with Hyundai Heavy Industries (329180 KS) and SK Hynix Inc (000660 KS) making up a third of the new short selling. Samsung SDI (006400 KS) had the largest amount of short covering in S. Korea.

Mark-to-market losses making shorts squeezable

The rally in S. Korea has hit S. Korean short sellers with -$5.9 billion of year-to-date mark-to-market losses, down -38% for the year. Although S. Korean stocks are not exceptionally crowded on average, they are becoming more squeezable. If the rally continues, expect short covering in these squeezable names to help drive up stock prices even more.

Conclusion

Short sellers in S. Korea are increasing their bets that a market pullback is inevitable after such a quick and explosive rally just like we saw in late February/early March. The S. Korean market has nearly tripled in 2025-2026, is a breather or pullback coming? Short sellers are positioning themselves for a pullback.