SK Hynix short selling hits record as AI sector worries grow

Short selling of SK Hynix shares has reached a record high in April, following South Korea’s decision to lift its ban on short-selling on March 31.

This comes amid rising concerns over global trade tensions and uncertainty in the AI sector.

According to Bloomberg, short sales of the company’s shares hit 1.5 trillion won (US$1 billion) this month, with overseas institutions net selling over 2.9 trillion won (US$2.03 billion) in shares.

Investor sentiment has been negatively affected by several factors, including uncertainty about US AI capital expenditures and ongoing semiconductor trade disputes.

SK Hynix, which saw its stock more than double in the past two years, has lost 20% from its peak in January.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ South Korea’s short-selling bans reveal a cycle of market protection and vulnerability

Short-selling bans have become a recurring regulatory tool in South Korea’s financial markets during periods of uncertainty.

The latest ban was implemented in November 2023 and lifted on March 31, 2025, continuing a pattern seen during the COVID-19 pandemic when authorities similarly restricted short-selling to protect market stability 1.

These bans create a pressure-cooker effect where bearish sentiment builds during the restriction period and explodes once constraints are lifted, as evidenced by the record 1.5 trillion won in short positions against SK Hynix within just weeks of the ban ending.

When South Korea previously lifted short-selling restrictions in 2021, they did so gradually, starting with 350 major stocks in the Kospi 200 and Kosdaq 150 indices, including SK Hynix 2.

This regulatory approach highlights the tension between protecting retail investors who comprise a significant portion of the Korean market and maintaining the market mechanisms needed for price discovery and liquidity.

2️⃣ SK Hynix’s market leadership shift reflects the transformation of semiconductor demand

SK Hynix is poised to overtake Samsung as the leading DRAM supplier globally for the first time in over three decades, capturing 36% market share compared to Samsung’s 34% in the March quarter 3.

This leadership transition coincides with a fundamental shift in memory chip demand, where AI applications—rather than PCs or smartphones—are now the driving force, benefiting SK Hynix which has positioned itself as a dominant supplier of high-bandwidth memory (HBM) chips for AI training.