Short selling surged in the Korean stock market in February due to the spread of COVID-19 infections. Short sellers such as foreign investors may have made a fortune, stock market experts say.
The average daily short selling volume in the KOSPI market hit 595.9 billion won in March, KRX Short Selling Portal said on March 8. This is a 20 percent increase from the previous month's average of 515 billion won, up for three consecutive months since the beginning of 2020. The figure nearly doubled from the average daily short selling volume of 318 billion won in 2019.
In particular, the average short selling volume in February was higher than 486.7 billion won in May 2018 and 498.9 billion won in October 2018 when the stock market fluctuated due to concerns over the U.S.-China trade conflict. In the KOSDAQ market, the average daily short selling amount in February arrived at 155.5 billion won, up 8.1 percent from the previous month.
In February, foreign investors’ short selling volume amounted to 254.1 billion won, accounting for 49.9 percent of the total. Institutional investors accounted for 49.2 percent (250.6 billion won) and individual investors only 0.9 percent (4.4 billion won). Stock market watchers believe that foreigners made a big profit through short selling in the bear market.
Under these circumstances, individual Korean investors posted a petition on the Cheongwadae online petition board asking the government to abolish or temporarily prohibit short selling. Some suggest that short selling be banned from the time when the share price falls more than 10 percent.