Short selling ban in South Korea: Mega rally on the stock markets

Südkorea hat ein vollständiges Leerverkauf-Verbot beschlossen. Die Kleinanleger freut das. Die Aktienmärkte des Landes legen eine Mega-Rallye hin.

Shortly

• Südkorea verbietet Leerverkäufe, um illegale Nutzung zu unterbinden.
• Kleinanleger freuen sich über das Verbot.
• Aktienmärkte legen eine Mega-Rallye hin.

Stock markets in South Korea see a significant increase after the introduction of a total ban on short selling. Due to the illegal use of this trading tactic by hedge funds and other institutional investors, the ban was deemed necessary by regulators to protect the domestic market.

The ban on short selling could help boost confidence among retail investors who complained about the impact of short selling ahead of the upcoming elections in April. However, the move is also likely to lead to foreign funds withdrawing, which could complicate South Korea's efforts to gain industrialized nation status in MSCI's indices.

The leading index Kospi recorded a rise of 5.7 percent after the ban was announced, while the small-cap index Kosdaq rose 7.3 percent. The decision to ban new short positions until the end of June 2024 could lead to funds unwinding their short positions, as shown by the strong influx of international investors.

However, market watchers warn that the politically motivated reversal on short selling could be aimed at the upcoming elections. The public perception of short selling in South Korea remains negative, which is why the government is likely to welcome the move.

The introduction of the short selling ban came just days after the FSS announced a comprehensive investigation into short selling by global investment banks. These measures indicate that South Korea is committed to combating the illegal use of short selling and protecting its domestic market.

According to a report from www.wallstreet-online.de