“I was only looking at March 15th, but the short selling action was extended again, making it virtually impossible to achieve this year’s target rate of return.”
On the 3rd, when the ban on short selling in the domestic stock market, which was scheduled to expire next month, was extended until May 2nd, a representative of a professional private equity management company expressed a sense of crisis, saying, “The private equity industry is being driven into a situation where it is necessary to worry about the existence of it.” did. This manager was a manager who had invested the total amount of net assets (AUM) of over 500 billion won in the long-short strategy until last year. As of last month, the long-short AUM shrank to 30 billion won. As short selling was banned, the long-short strategy, the main pillar of equity-type private equity funds, was reduced to’useless’.
The industry argues that the ban on short selling also played a major role in the contraction of Korean hedge funds. It is analyzed that the disappointment of investors toward the private equity fund was further increased as the long-short strategy, which was not related to the redemption suspension, failed to function normally while the inflow of new funds to the private equity was blocked due to the rhyme crisis. According to the specialized private equity management industry, the net assets of pure long-short strategy funds, excluding multi-strategy (multi-strategy) that combine multiple strategies, are estimated at 700 billion won. They earned an average of 13.88% last year, falling below the KOSPI increase rate (30.76%).
Experts protest that there is a misunderstanding of individual investors’ perceptions of short selling. It is explained that private equity managers use short selling as a’safety device’ to raise stable returns in parallel with buying, but do not use it for the purpose of maliciously lowering the stock price. In the presence of competitors A and B, the core of a long-short strategy is to buy (long) Company A and sell (short) Company B, which is considered more promising, to reduce the risk of loss and bring the difference in the yield between the two stocks. to be.
A former private equity manager who requested anonymity said, “In response to the ban on short selling, we tried to implement a long-short strategy using index futures, but it was impossible to operate normally in a situation where the market surged and volatility increased.” It is rare that infinite short selling is actively used to increase the yield.”
Reporter Jeon Beomjin [email protected]
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