KEPCO Shorts Retreat as Lending Pool Loosens Before August Print

Korea Electric Power Corporation (KEP) heads into its August 12 earnings report with short sellers pulling back and the lending market at its most relaxed in months — a notable backdrop for a stock that has historically sold off hard after results.

The most interesting development in positioning is how dramatically the borrow market has eased since mid-July. Availability has surged to 702%, meaning roughly seven shares sit available in the lending pool for every one already borrowed — far looser than the 248% reading hit on July 10, which marked the tightest point of the past year. Cost to borrow reflects the same story: it runs at just 0.52%, down roughly 6% over the past month and flat week-on-week, a low level consistent with minimal speculative borrow demand. Short interest itself climbed about 40% over the past month in share terms, peaking around late July before edging back in the most recent sessions. That one-month rise sounds dramatic, but it follows a period of historically light positioning, and with the float percentage unavailable, the absolute level remains modest. Options positioning adds little urgency to the picture: the put/call ratio at 0.51 is almost exactly in line with its 20-day average, and the z-score of -0.16 is negligible — options traders are neither piling into protection nor expressing unusual confidence.

The fundamental bull and bear cases for KEPCO are well-established and slow-moving. A recent ORTEX note flagged stronger-than-expected Q2 operating performance, with improved efficiency and rising domestic electricity demand cited as positive drivers. On the value side, the stock trades at a steep discount to book — under 0.6x — and carries a dividend score in the 99th percentile, making it structurally attractive to income-oriented investors. The bear case centers on what has persistently weighed on the stock: suppressed domestic tariff structures, a heavily leveraged balance sheet, and a history of missing on the earnings day itself. Analyst data is too stale to cite meaningfully — the most recent coverage on record dates to 2021 — so the Street's current view is effectively untracked on this platform. The 30-day EPS momentum factor ranks in just the 5th percentile on a 90-day view, though the 30-day reading has recovered to the 83rd percentile, suggesting estimates may be stabilizing.

History makes the stakes clear. The last three earnings events all produced negative reactions: the February 2026 print saw the stock fall nearly 12% on the day and extend losses to 27% over the following five sessions. The two May events — which appear to reflect the same announcement — each showed a roughly 4.5% one-day drop and an additional decline toward 9% over the week. That pattern of persistent post-earnings selling is the sharpest piece of context heading into Wednesday's release.

The print will therefore test whether the operational improvements flagged in Q2 are enough to break a consistent streak of disappointment — and whether a much looser borrow market reflects genuine short covering or simply a lull before positioning rebuilds around the result.