With Conditions
Financial Supervisory Service Governor Lee Bok-hyun said in an interview with Bloomberg that he is considering lifting the partial short selling ban in the South Korean stock market this year. However, he added a condition: “If the financial market unrest is resolved within a few months.”
Most individual investors in the market are opposed to what he said, saying it will cause stock prices to fall. There are also those who argue that the ban should be lifted so that more foreign investors can enter the market and the market can become a part of the MSCI World Index.
Earlier, Korea Exchange Chairman Sohn Byung-doo made similar comments. “Relaxing short-selling regulations will help the Korean stock market to be included in the index,” he said in his Bloomberg interview on March 17, adding, "Still, this issue is very political and the government needs to convince the public first of all."
According to some in the industry, the authorities’ remarks imply that the government's stance on short selling is changing. In July last year, President Yoon Seok-yeol called for measures to eradicate short selling-related illegalities. Constant short selling monitoring and illegal short selling crackdown and punishment were two of his presidential campaign promises.