[김종열의 머니 talks] Short selling’their own league’

[김종열의 머니 talks] Short selling’their own league’

Finance Team Leader, Ministry of Economy

Input: 2021-01-14 19:01:04Revision: 2021-01-14 19:06:27Posted: 2021-01-14 19:10:31 (p. 21)

Bongi Kim Seon-dal floated and sold the flowing Daedong River. Foreigners and institutions borrowed and sold stocks they didn’t even have. Which is more unfair? Is Bong Kim Seon-dal’s Daedong River? At first glance it seems so. Why don’t you borrow, sell, buy again, and pay back? It looks a hundred times better than digging a river that isn’t mine.

But is it really? What if you float pure water in deep valleys and sell them finely in bottles? I don’t know whether to buy it or not, but I don’t feel reluctant. Now is the time to buy and sell water. However, when it comes to short selling by borrowing stocks that don’t exist, there are many people who go beyond reluctance to sell them.

Short selling refers to anticipating a decline in the price of a specific stock that is not held, lending and selling the stock, and then buying and repaying the stock when the price falls. For example, if you borrowed A stock today and sold it for 10,000 won, and three days later, if the stock price dropped to 8,000 won, you bought the stock again and paid it back. Then, you can get a profit of 2,000 won.

By the way, it is said that the stock price is likely to fall, but the stock price falls because it is actually sold. It is a short selling to lower the stock price. And take advantage of the decline. It’s a good system for anyone to play with.

Of course, there is also a pure function. First of all, it prevents stocks from overheating by allowing investors who expect a decline in stock prices to actively participate in the stock market. In addition, the amount of transactions made by short selling leads to an increase in liquidity in the stock market. The greater the liquidity of the stock market, the more appropriate stock prices can be found.

The recent controversy over short selling is hot as the Financial Services Commission announced its policy not to extend the period of the’temporary short selling ban’ which ended on March 15, that is, to allow short selling again from March 16. Put positive and dysfunctional functions on both sides of the scale to argue about which one is heavier.

However, there is a problem that must be solved before confrontation by putting the net function and dysfunction of short selling on the ring. It is a problem of a’tilted playground’ of short selling, which is wide open only to foreigners and institutions.

99% of the subjects of short selling are foreigners and institutions. Neither ants nor short selling is impossible. However, short selling by individuals has very strict conditions such as the limit of loans, the period of loans and the ratio of collateral, and the amount available for short sale is very small, so it does not account for 1% of the total short sale. As long as there is no institutional improvement that lowers the high short selling threshold to the level of foreigners and institutions only for individual investors, no matter how large the net function of short selling, the ants’ originality will not fade. [email protected]