“If short selling, which was temporarily banned, is allowed again in March, it is a bad thing for the stock market. In the liquid market, Donghak ants raise their stock prices and they are pulled down by the financial authorities.”
Lee Sang-gyu (pseudonym), an individual investor in his 40s, who has been in the stock market for 20 years, expressed a strong dissatisfaction with the Financial Services Commission’s policy to resume short selling. It seems that the intensity of dissatisfaction toward the financial authorities is increasing as the KOSPI, which has been on fire for several days, has been on fire after hitting an all-time high. The Financial Services Commission announced through a notice on the evening of the 11th that it will resume short selling from March 16th.
Short selling was a hot potato in the stock market on this day. As reflecting the public interest in the stock market, short selling has emerged as a key search word on internet portals. In the YouTube stock information broadcast, which individuals refer to for investment, a diagnosis of concern about supply and demand per item due to the resumption of short selling became popular. In the social network service (SNS), individual investors complained that’short selling is the main culprit of today’s stock price plunge’,’stock market now seems to be over’, and’short selling should be abolished, not banned.
Political circles also expressed concern over the FSC’s policy to resume short selling. “Donghak ants are not simply making money, but are investing in Korea,” said Yang Hyang-ja, the top member of the Democratic Party, and said, “If it resumes without resolving the fundamental suspicion of short selling, not only the market turmoil but also individual investors. The backlash will be huge,” he pointed out.
Democratic Party lawmaker Park Yong-jin also said, “We ask again to be cautious about the resumption of short selling,” and said, “The attitude of the Financial Services Commission is irresponsible.” He criticized, “It is said that it has been systematically corrected, but the current short selling system is a slanted playground with many holes for illegal activities.”
If foreigners and institutional investors resume short selling from March 16th, it could be cold in the short term. The possibility of a’March sale shock’ is also raising its head. On March 13, last year when the ban on short selling was announced, the transaction amount for short selling in the securities and KOSDAQ market amounted to 1.18 trillion won.
The trading value for short selling remained at the level of 340 billion won at the beginning of last year, but increased to 1 trillion won in line with the time of the stock market crash. This is why there is a view that if short selling is allowed, the selling force, which had been suppressed for a year, could again fuel the stock price decline.
Individual investors appear to be anxious, saying that volatility in the domestic stock market will expand and that it will be accompanied by shrinking investment sentiment and realization of arbitrage. Donghak ants demanded a “permanent ban on short selling” through a petition at the Blue House at the end of last year and obtained consent from more than 80,000 people. The Korea Equity Investors Association, an individual investor rights protection organization, also urged the abolition of short selling.
[강계만 기자 / 최예빈 기자]
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