Donghak ants “prohibit short selling” vs. market line “stock market bubble, resume immediately”

With the KOSPI breaking through the 3100 line for the first time in history and running a fierce race amid the cold wave, the’revival of short selling’, which has come two months later, is emerging as a hot potato. The arguments of’early resurrection’ that the ban on short selling should be lifted before a bubble (bubble) occurs in the rapidly overheated stock market is mixed with the side that “opposites” that short-term corrections due to the resumption of short selling will put cold water on the KOSPI rise.

Short selling is an investment method in which a stock is borrowed and sold when a stock price is expected to fall, and then when the stock price falls, it is bought and paid off at a low price. Since its introduction in the domestic stock market in 1996, its trading volume has increased rapidly. According to Park Yong-jin, a Democratic Party lawmaker’s office on the 10th, the average daily trading value for short selling was 6541 billion won just before the ban on short selling in March last year, up 394% over the past 10 years (132.4 billion won in 2010).

The ban on short selling is scheduled to be lifted on March 16th. The Financial Services Commission (hereinafter referred to as the Financial Services Commission) made a short sale of all listed stocks in the KOSPI, KOSDAQ, and KONEX markets to prevent a collapse in the domestic stock market due to the pandemic (global pandemic) of the novel coronavirus infection (Corona 19) on March 16 last year. Banned. Initially, it was planned to stop for only six months until September 15 last year, but it was extended by six months in consideration of the corona 19 re-proliferation tax.

As the day of short selling revival approaches, the movement of individual investors, the so-called Donghak ants, is accelerating to prevent this. At the end of last year, an article titled’Petition for the permanent ban on short selling’ was posted on the Blue House National Petition Bulletin.

The author said, “Money goes into companies with investment value (even without short selling), and money goes out in companies with no investment value.” “There is no problem with the stock market running. I petitioned. As of 1 pm on the 10th, 44793 people agreed to this post.

Until now, Donghak ants have called the short selling market’a playground for institutions and foreign investors’. It is a sloped playground as it is not easy for individuals to quickly grasp investment information like institutional investors or to borrow stocks on a large scale (large stocks) and sell short. Therefore, some argue that it is necessary to adjust the slope of the playground, such as raising the limit for individual short selling investment.

Nevertheless, there is anxiety in Donghak ant’s’Short Selling Povia’ that the highest price ever marched and the winged Kospi could get caught. This is because short selling, betting on a decline in stock prices, can induce a decline in certain stocks.

Even in politics, there are voices that it is premature to’reopen short selling’. Rep. Park Yong-jin said in a press release on the 10th, “(After looking at the Financial Services Commission’s data), illegal non-borrowing short-selling was caught several times even during the period of prohibiting short-selling. After improving the system, such as raising it, short selling should be resumed.”

On the other hand, there are some opinions that’short selling should be resumed’ before’bubbles’ in the stock market overheated in the short term. Hwang Se-woon, a research fellow at the Capital Market Research Institute, argued that “the current domestic stock market is rising too rapidly, and there is a growing concern about a bubble.” It is explained that now, when the KOSPI continues its high strides, it is the right time (timing) for the net function of short selling to remove the bubble of overvalued stocks.

In fact, compared to the US and Japan, which maintained short selling despite the impact of Corona 19, the rate of increase in domestic stock prices is steep. The KOSPI index soared 17% in the last month as of the 8th. During the same period, the US Dow Index (3%) and Japan’s Nikkei 225 Index (6.3%) rose less than half of the KOSPI.

The ball is now in the hands of the financial authorities. The Financial Services Commission, which has the power to decide when to resume short selling, is cautious. An official from the Financial Services Commission said, “Currently, we are improving the system, including the establishment of a system for detecting illegal short selling, and applying investment limits while expanding opportunities for short selling to individuals. I will decide whether to extend it.”

Reporter Yeom Ji-hyun [email protected]