[서울신문] ‘Why do I hate short selling?’ asked individual investor representatives

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▲ The’Anti Short Sale’ publicity bus that the Korea Stock Investors Association will run between Yeouido and Gwanghwamun in Seoul from the 1st.
Provided by Korea Stock Investors Association

“The stock price plummeted in the aftermath of short selling by foreign investors and institutional investors during the first pandemic in February and March of last year. The demonic nature of short selling has been confirmed.”

Korea Stock Investors Association CEO Jeong Eui-jeong, who has opposed the resumption of short selling, said in a telephone interview with the Seoul newspaper on the 31st. He interpreted that the’boxpi’ (an expression of self-help of Kospi, which is trapped in the box zone and repeats fluctuations) from 2007 to 2019, was not broken, as a result of short selling. CEO Jung added, “After extending the ban on short selling for the next one year, social discussions should be made over the reform of the system.” The petition for the abolition of short selling, which he led, is waiting for the government’s answer with more than 200,000 people’s consent.

Recently, the International Monetary Fund (IMF) announced that it is possible to resume short selling for the Korean stock market. In addition, scholars are suggesting that short selling should be resumed in order to remove the bubble in the stock price or prevent the outflow of foreign investment. However, CEO Jung said, “The discovery of the fair price is a natural function of the market, and short selling is not artificially possible.” “I learned that the stock price fell because institutions and foreigners sold even on the 29th, but the market can function at midnight without short selling. To show.”

CEO Chung agreed that extending the ban on short selling could lead to some of the foreign capital escape, but insisted, “It will be an opportunity.” He said, “The domestic stock market has a higher proportion of foreigners than other countries, so I think it is good in the long run to organize this and inflow of domestic funds.” He also added that “the current market is in a state of overflowing liquidity, so it will not be a big shock if foreign funds escape.”

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▲ Jeong Eui-jeong, CEO of the Korea Stock Investors Association
Self-provided

CEO Jeong argued, “Even if the liquidity is immediately bad due to the loss of foreign funds, liquidity can be maintained by adding the funds that went to real estate or floating funds.” If short-selling is resumed while the system has not been completely overhauled, the stock price will drop sharply and the public will be concerned that they will suffer.

CEO Chung said, “In order to attract foreign capital from the financial authorities during the 1997 currency crisis, foreigners and institutions can earn a lot of money, such as the’market maker system’ and’unlimited repayment period for obligatory short selling’. “I included it,” he said. “Why is there a dishonorable nickname for our country as’foreign ATM’.”

Meanwhile, regarding the GameStop incident that recently hit the US financial investment industry, CEO Jung said, “The US has a fixed deadline for repayment of short selling, so individual investors can press the short selling forces.” After hedge funds lowered their prices by short selling, they tried to repurchase stocks at a lower price to make a profit, but the price continued to rise due to angry individuals, and the losses of the short selling forces near the due date of repayment are growing exponentially. CEO Jung pointed out that “Korea has an unlimited repayment maturity date for short selling forces, but it is unfair for individual investors to repay within 30 days.”

Reporter Yoon Yeon-jung [email protected]