Shorting on LG key companies surges on disappointing Q2 results

2022.07.29 14:08:52 | 2022.07.29 14:09:17

[Photo by MK DB]이미지 확대

[Photo by MK DB]

Key listed companies of South Korea’s fourth largest conglomerate LG Group have become biggest targets for short selling on the Kospi amid deteriorated earnings.

LG Display became the primary target upon reporting an operating loss of 488.3 billion won ($376 million) for the second quarter – the biggest quarterly red in two years – on Wednesday. Sales fell nearly 20 percent on year to 5.6 trillion won.

Short account that amounted to 4 billion won on Tuesday, taking up 28.8 percent of total trade turnover in the stock, stretched to 7.7 billion won after the earnings release, or 33 percent against turnover. Brokerages rushed to cut target price on the disappointing results.

Hana Securities lowered its target by 25.9 percent to 20,000 won. “LG Display is likely to post an operating loss of 184.1 billion won in the third quarter, although eased from the previous quarter on normalization of shipments to China,” said Kim Hyun-su, a researcher at Hana Securities.

Its shares rose 0.65 percent to 15,500 won in the early trading on Friday.

Shorting on LG Chem also increased after the chemical giant on Wednesday reported 59 percent on-year plunge in operating income to 878.5 billion won.

Shorting account that had been at 5.6 billion on Tuesday to make up 4.2 percent of the stock turnover surged to 32.7 billion won or 13.9 percent share after the disappointing earnings release.

LG Chem shares were up 0.33 percent to 600,000 won on Friday.

Shorting in LG Energy Solution that had been heavy ahead of the six-month institutional lockup on Thursday eased on subsided concerns for institutional selling upon upbeat outlook following the second-quarter performance report on the same day.

The short position that amounted to 52.3 billion won to make up 19.1 percent of total turnover of the No.2 Kospi stock shrank to 22 billion won, or 2.2 percent against turnover on Thursday.

Brokerages kept their target price at 500,000 won. LGES shares rose 0.24 percent to 416,500 won in the morning session on Friday.

By Park Yoon-ye and Jenny Lee

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