Synopsis
Seoul, March 30 (NationPress) South Korea is lifting its five-year ban on stock short selling this week, with shipbuilders, steelmakers, and battery makers expected to be key targets in these trading activities. This move follows a temporary ban initiated in November 2023 due to naked short selling violations.Key Takeaways
- Full lifting of short selling ban in South Korea.
- Targets include shipbuilders, steelmakers, and battery manufacturers.
- New detection system implemented by Korea Exchange (KRX).
- Market monitoring to be enhanced post-ban lifting.
- Financial stability measures promised by regulatory authorities.
Seoul, March 30 (NationPress) South Korea is preparing to completely remove the restrictions on stock short selling this week, marking the first occurrence in five years. Market analysts suggest that shipbuilders, steelmakers, and battery producers are likely to become the focal points for these trading strategies.
The nation instituted a temporary prohibition on short selling in November 2023 following the exposure of multiple naked short selling infractions involving several international investment banks.
Beginning Monday, short selling will be permitted for all publicly listed companies for the first time since March 2020, when authorities suspended short selling amid a market crash triggered by the COVID-19 pandemic, as reported by Yonhap news agency.
The prohibition was partially lifted in May 2021 but was reinstated in 2023.
Prior to the resumption of short selling, the Korea Exchange (KRX) developed a new system aimed at identifying any unlawful activities. The financial regulator also implemented new regulatory adjustments.
The financial oversight body announced earlier that it will bolster market surveillance and introduce measures to mitigate excessive price fluctuations of specific stocks for up to two months after the short selling ban is lifted.
Market analysts indicated that battery manufacturers, shipbuilders, and steelmakers could be the targets for short selling as their stock prices have recently surged due to optimism surrounding support policies and potential industry recovery.
"Stocks that are overbought might face short-term price swings," stated Lee Kyung-min, an analyst at Daishin Securities. "However, short selling itself is beneficial for attracting foreign capital investments.”
In addition, the leader of South Korea's financial regulatory body pledged to implement proactive measures to maintain financial stability amid numerous challenges, including elevated interest rates and policy changes under the Trump administration.
Lee Bok-hyun, governor of the Financial Supervisory Service (FSS), emphasized the importance of further developing and promoting the local financial market to align with global standards.
"Our economy and financial system are surrounded by various uncertainties, including political factors that increase market volatility and economic risks," the FSS head remarked.
