While the government and the ruling party were contemplating whether to resume short selling, a study found that the return on investment from short selling was about 900 billion won over the past three years, far higher than the credit loan investment rate. Amid growing opposition to the resumption of short selling among individual investors, it is noteworthy whether some of the Democratic Party lawmakers’ arguments, including lawmakers Kim Byeong-wook, Yang Hyang-ja, and Park Yong-jin, who are cautious about the resumption of short selling, will benefit.
According to the financial sector on the 17th, the paper titled’Investment Performance of Short Selling and Credit Transactions’ published in the Financial Management Research Vol.37 No.4 of the Korean Financial Management Association last month included short selling from June 30, 2016 to June 28, 2019. Profits amounted to about 91.75 billion won, which is 39 times more than the credit transaction proceeds (23.36 billion won).
In terms of amount, the amount of credit transactions amounted to 547 trillion 92.7 billion won, accounting for 7.93% of the total, twice the amount of short sale transactions (309 trillion 813.2 billion won, 2.48%). However, the average return is that short selling is much larger. According to the daily average, short selling profits were 1,275 million won, and credit transaction profits were only 1.25 billion won.
Park Yong-jin, a Democratic Party member / Yonhap News
Democratic Party lawmaker Park Yong-jin set the day for the Financial Services Commission, which is pushing for resumption of short selling. Rep. Park said on Facebook that “the Financial Services Commission has forgotten the role of the financial authorities,” and said, “It is irresponsible to resume short selling without an institutional improvement roadmap and countermeasures against illegal activities.”
“The Financial Services Commission is trying to promote financial policy without even a roadmap for short selling policies in a way that fits into the conclusion that short selling will resume in March,” he said. “The issue of resuming short selling is not a matter that can only be decided by the FSC.” said.
Rep. Park said, “On the evening of the 11th, the Financial Services Commission urgently distributed a text message to reporters stating’plan to finish system improvement with the goal of resuming short selling in March’, and on the 14th, regarding the resumption of short selling by the Prime Minister. He actually refuted the government’s position of unconfirmed remarks,” he said. “I wonder why the officials of the Financial Services Commission are doing such a de facto surpassing act.”
Yang Hyang-ja, a Democratic Party member
Rep. Yang Hyang-ja, who served as the top member of the Democratic Party, said earlier, “Donghak ants are not individual investors aiming only for short-term arbitrage. If you cannot resolve the anxiety of Donghak ants, you should seriously consider extending the ban on short selling.” Rep. Yang said, “The job of the politics is to induce abundant liquidity to flow into the New Deal Fund and the future industry,” said Rep. Yang. “The system should be reviewed and supplemented for bold and active investment. The policy should not break expectations. “I said.
Kim Byeong-wook, a Democratic Party member / News 1
Democratic Party lawmaker Kim Byung-wook, who served as the ruling party secretary of the National Assembly’s Political Affairs Committee, also said earlier that “the short selling should not be reopened blindly.” Rep. Kim appeared on a radio broadcast and said, “We are currently improving the short selling system and are making results. We reviewed comprehensively how the effect of this system improvement will be reflected in our market, and if it is determined that it has become fair, we propose a short selling. It is desirable.”
Reporter Mi-Hyun Cho [email protected]
Ⓒ Hankyung.com prohibits unauthorized reproduction and redistribution