South Korea Sees $1.16 Billion in Short Selling on Trading Resumption
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Synopsis
On March 31, South Korea witnessed over 1.7 trillion won in short selling ($1.16 billion) as the trading scheme resumed after a ban. This marks a significant increase since the previous ban was imposed in November 2023 amidst regulatory violations.
Key Takeaways
- Short selling reached 1.7 trillion won on resumption.
- Temporary ban was imposed in November 2023.
- First short selling since March 2020.
- 1.54 trillion won from foreign investors.
- New regulatory measures are in place.
Seoul, March 31 (NationPress) The short selling activity in South Korea amounted to over 1.7 trillion won ($1.16 billion) on the initial day of the trading scheme's resumption, according to data released on Monday.
The nation had previously enacted a temporary ban on short selling in November 2023 following the discovery of numerous naked short selling violations involving various global investment banks, as reported by Yonhap news agency.
As of Monday, short selling is permitted for all listed companies for the first time since March 2020, when authorities prohibited the practice due to a market downturn triggered by the COVID-19 pandemic.
The ban was partially lifted in May 2021 but was reinstated in 2023.
As per the Korea Exchange, investors engaged in short selling reached 1.73 trillion won on Monday, with 1.3 trillion won from stocks on the main bourse and 430 billion won from those on the tech-focused KOSDAQ market.
This figure signifies a considerable increase from the 772 billion won recorded on November 3, 2023, just before the country reinstated the short selling ban.
Foreign investors accounted for 1.54 trillion won in short selling, representing 90 percent of the total, while institutional investors contributed 111 billion won.
On the same day, the benchmark Korea Composite Stock Price Index fell by 3 percent, closing at 2,481.12 points, with the tech-centric KOSDAQ dropping 3.01 percent to 672.85 points.
The bourse operator has implemented a new system to identify any illegal activities. The Financial Supervisory Commission, the national financial regulator, has also introduced new regulatory amendments.
Furthermore, the Financial Supervisory Service, the financial oversight body, announced earlier that it would enhance market monitoring and take steps to avert excessive volatility in specific stocks for up to two months following the lifting of the short selling ban.
