Strange views on the revival of short selling… Expert’stock bubble adjustment’ vs. ants’stock price plunge’

[이뉴스투데이 이상헌 기자] Short selling is back again. Despite the opposition of the ants, the opinion of experts was accepted that it should not be postponed any longer to catch the stock market. There is no clear answer to the concerns that the stock market could plummet.

In stock prices on the 15th, fears are spreading that if the ban on short selling is lifted, the stock price will plummet and recovery will be difficult. Among individual investors, there is even a ’20-year stock market adjustment theory’. Cheongwadae petitions are coming up saying “the short selling should be completely abolished”

Even in the politics ahead of the by-election, voices against the resumption of short selling come out. On the 12th, Yang Hyang-ja, the top member of the Democratic Party, said, “The resumption of short selling will not only cause market turmoil, but also the backlash of individual investors,” and argued that it is urgent to relieve the anxiety of Donghak ants.

Rep. Park Yong-jin, a member of the political affairs committee, also pressed the Financial Services Commission, saying, “The current short selling system is a slanted playground with many holes for illegal activities.” However, it is not enough to change the existing policy.

While the politics’ logic, which is concerned about investment loss, is losing its strength, the voices of experts that short selling is necessary to’adjust stock bubble’ are gaining convincing.

Rep. Yoon Chang-hyun, former president of the Korea Financial Research Institute, diagnosed, “It is not right to ban short selling assuming panic selling in a situation where the stock market is hot enough to raise concerns about panic buying rather than panic selling.”

Lee Han-sang, a professor of business administration at Korea University, argued that “the function of investor protection of short selling cannot be ignored.” He emphasized, “Short selling can be expected to have the effect of preventing stock prices from going out by buying insolvent stocks from the top by lending them with credit. To protect ant investors, rather short selling is necessary.”

On the other hand, individual investors argue that this claim is only a theoretical logic. They are saying, “Why is it this time?” and “The timing is bad.” Short selling refers to the sale of stocks that do not exist. Right now, even if you don’t have stocks, you can offer them to sell once, so they are sold at a low price. In this case, there will be a side effect of dropping the stock price that is likely to rise.

Stock prices have stronger resilience than any other financial product. The KOSPI index, which collapsed to the 1850 line in March last year due to the spread of Corona 19, opened an era of 3100 points thanks to liquidity. It has risen more than 1.6 times in less than a year.

An official in the securities industry said, “As the stock price is far above the average line, there is a high risk of a vertical fall.” Is big,” he said.

The decline from a major shock can take years to recover. In the case of the US Dow Jones, it took 25 years to recover from the stock price that plunged during the Great Depression. In Korea, it took more than five years to recover the KOSPI index, which plunged from the 2100 line to the half level during the 2008 financial crisis.

Lee Kyung-min, a researcher at Daishin Securities, warned, “The stock market has risen too fast compared to the pace of improvement in fundamentals over the past year.” .

On the other hand, the plan to resume short selling by the Financial Services Commission has already been resolved by a committee composed of nine members, and the situation has not changed from the previous position that the improvement of the system based on’strengthening punishment for illegal short selling’ and’activating individual short selling’ is completed as soon as possible to be.

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