SINGAPORE - National carrier Singapore Airlines (SIA) and chip testing firm AEM Holdings are among the top five stocks on the Singapore Exchange (SGX) that traders are betting will see their share price fall, according to data compiled by S&P Global Market Intelligence.
From Oct 26 to Nov 3, AEM Holdings topped the list of most-shorted stocks on SGX. The tech counter saw 14.68 million shares borrowed. Short interest, which measures the percentage of outstanding shares held by short-sellers, in the counter was at 4.74 per cent.
For the first nine months of 2023, AEM’s net profit plunged almost 97 per cent to $3.5 million, from about $115 million in the same period a year earlier, due to a sluggish chip industry and a one-off $26.7 million arbitration expense taken in the third quarter.
The S&P data shows only the positions that have the highest percentage of shares being borrowed, and does not reflect when a short position may have been originally executed.
Short-sellers bet that the price of a stock will fall, and sell shares they do not own.
Typically, they can borrow the shares from specialist firms like stockbrokers, and sell them at the current market price in the hope of buying them back later at a cheaper price, thus making a profit from the borrowed shares. They can also cover the short position by buying back the stock within the same trading day.
But short-selling comes with high risks and requires close monitoring. A profit will be made only if the share price does fall. Should the share price rise instead, the trader will then need to buy the shares back at a higher price and incur a loss.
From Oct 26 to Nov 3, SIA was the second-most-shorted stock, with 132.02 million shares borrowed and 4.44 per cent of its shares out on loan.
SIA’s shares had surged in the days preceding the release of its first-half earnings on Nov 7, and short-sellers may have been betting that its share price would drop after the results were out.
The carrier announced a record $1.44 billion net profit for the half year to end-September, up 55 per cent from the same period a year ago. Operating profit jumped 26 per cent to a high of $1.55 billion.
Mr Matt Chessum, securities finance director at S&P Global Market Intelligence, told The Straits Times that short interest remains low on SGX, with only 0.57 per cent of local shares in terms of market value currently on loan.
“This is one of the lowest across the Asia-Pacific region,” he said.
Short interest across the benchmark Straits Times Index was 0.57 per cent from Oct 26 to Nov 3, down from 0.61 per cent in the preceding seven-day trading period.
Other firms that attracted short-sellers during that period included in-flight caterer and ground handler Sats, and property counters City Developments Limited (CDL) and UOL Group.
Sats saw 36.35 million shares borrowed, and 2.44 per cent of its outstanding shares borrowed.
CDL saw 21.71 million shares borrowed and 2.39 per cent of its shares out on loan, while UOL had 20 million shares borrowed and 2.36 per cent of its shares out on loan.
