SOUTH Korea’s financial regulator, the Financial Services Commission (FSC) has implemented a ban on stocks short-selling effective Monday.
This decision has resulted in significant gains across major indexes.
The Korea Composite Stock Price Index (COSPI), South Korea‘s primary stock market index, experienced a notable surge of 5.66%, closing at 2,502.37.
Simultaneously, the small-cap KOSDAQ saw a remarkable increase of 7.34%, ending the day at 839.45.
The ban, applicable to all listed stocks, is expected to last until at least June 2024, as said by the FSC.
Short-selling refers to the sale of stocks by borrowing them in anticipation of price fall, before repaying the borrowed shares when the price goes down.
It has been seen as one of the main culprits for the stock market rout.
FSC hopes this move will bring about a more stabilized market environment.
The FSC has not only implemented the ban but has also initiated an investigation into a dozen international investment banks that were found frequently engaged in naked short-selling.
