Disagreement among experts over’short selling’
“Net functions such as prevention of overheating, enhancement of liquidity, and price discovery”
“There is no country as bad as Korea in terms of ants”
KB Kookmin Bank Dealing Room in Yeouido, Seoul on the 14th. yunhap news
The financial authorities stressed that the ban on temporary short selling would end in March. Individual investors opposed the policy of the financial authorities.
Considering the net function of short selling, market experts judged that it would be desirable to resume short selling unless under special circumstances.
Short selling is essential for net functions such as overheating prevention, liquidity enhancement, and price discovery, but these functions are difficult to experience, so individual investors have no choice but to reject it.
According to the Financial Services Commission on the 14th, the Financial Services Commission repeatedly announced that the temporary ban on short selling would end on March 15 as scheduled.
As the KOSPI exceeded the 3000 line and market expectations for the extension of the ban on short selling grew, it was interpreted that the policy to resume short selling was official. In addition, it seems that there is little need to extend the ban on short selling as the KOSPI continues its bull market.
On the 12th, dealers are working in the dealing room of Hana Bank in Myeong-dong, Jung-gu, Seoul. News 1
Short selling is a system in which stocks are borrowed and disposed of for a while during a downturn in the stock market, and then bought back at a lower price to gain profits.
For this reason, short selling was seen as a’absolute evil’ among individual investors. However, short selling is a system commonly used in advanced capital markets because it has net functions such as forming an appropriate price, strengthening liquidity in a bearish market, and preventing stock market overheating.
IBK Investment & Securities Research Center Director Jeong Yong-taek said, “As the authorities indicated that the current stock market is in an overheating phase, there will be an intention to highlight the net function of short selling that cools off overheating.” It seems that policy stability will also be considered as it has been postponed one after another.”
“There are many people who don’t know why the short selling system is necessary,” said Hwang Se-woon, a research fellow at the Capital Markets Institute. He added, “If short selling is made frequently in the bitcoin market, the current high volatility will have some mitigating effects.”
“In order for the Korean stock market to become advanced, it must be incorporated into the advanced market of Morgan Stanley Capital International (MSCI). If short selling is prohibited, it cannot be incorporated into advanced markets.” It’s not just this wrong. Ultimately, the resumption direction is correct, but the key will be how to balance the short selling market, which is focused on foreigners.”
However, the position against short selling is also strong.
Korea Equity Investors Association CEO Eui-jung Eui-jung said, “Foreign investors say why short selling is prohibited only in Korea, but from the standpoint of individual investors, there is no country that suffers as bad as Korea’s short selling. In order to resume the program, the financial authorities should first publish statistics that investigate the profits of short sellers.”
In addition, individual investors and some of the passports said that the first priority was to prepare a system to eradicate illegal short selling.
Meanwhile, with the aim of resuming short selling in March, the Financial Services Commission is revising the system in the direction of strengthening punishment for illegal short selling, improving the market maker system, and improving personal access to short selling.
Reporter Beomsoo Kim [email protected]
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