Tuesday, March 2, 2021

South Korea has banned short sales after GameStop-Kindesk

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Retail investors in South Korea pointed to the US GameStop story to pressure local regulators to increase restrictions on short-selling shares. They have succeeded, at least for now.

Then, GameStop happened.

In January, retail investors in the United States banded together in favor of stocks (like the American video game store GameStop) betting on the state that certain Wall Street hedge funds were short. Gamestop share price Touch the skyWall Street obliges investors Cut their losses Buy more shares, raise more prices.

U.S. retailers were soon joined by interested Small investors From all over the world. In South Korea, where retail investors dominate the stock business (for which accounting) 70% of the market), Traders at Living in warCovered in anti-short selling slogans. About 30,000 Korean businessmen The news came together In an online forum to raise the price of stocks Celtrian Which are often noticed by foreign short sellers. Some local politicians Assembly in the back Retail investors who called for an extension of the ban.

On Wednesday, Eun Sung-su, chairman of South Korea’s Financial Services Commission, announced at a news conference that the sanctions had not only been extended, but would be partially lifted after May 2, with more than 2,000 shares still in force.

“The partial resumption is designed to mitigate the impact on the market, as these stocks have large market caps and liquidity, so a short sale resumption could have a limited impact on share prices,” the press release said.

While local investors have welcomed the temporary expansion, this view has not been shared by institutions around the world. January 2, International Monetary Fund (IMF) Requested the country In order to lift the ban, the markets were now stable.

According to local media, the Financial Times Stock Exchange (FTSE) on Wednesday A letter has been sent to the news Warning South Korean regulators that it could withdraw the country’s classification as a “developed country” on the FTSE Equity Country Classification The index should be in place of the prohibition. In order to qualify as a developed country, it should sell short in the equity market.

In 2020, there was the Korean Stock Exchange In the top 20 The world in terms of market capitalization.

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