{"id":2208500,"date":"2025-02-25T08:00:22","date_gmt":"2025-02-24T23:00:22","guid":{"rendered":"https:\/\/koreapro.org\/?p=2208500"},"modified":"2025-02-24T12:48:38","modified_gmt":"2025-02-24T03:48:38","slug":"south-korea-to-resume-short-selling-in-march-but-market-risks-remain-high","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2025\/02\/south-korea-to-resume-short-selling-in-march-but-market-risks-remain-high\/","title":{"rendered":"South Korea to resume short selling in March but market risks remain high"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">South Korea will fully reinstate short selling across all 2,700 listed stocks from March 31, ending a 17-month ban that regulators <\/span><a href=\"https:\/\/koreapro.org\/2023\/11\/south-korea-suspends-short-selling-for-8-months-despite-economists-criticism\/\"><span style=\"font-weight: 400;\">introduced in Nov. 2023<\/span><\/a><span style=\"font-weight: 400;\"> to curb illegal trading practices and protect retail investors, the Financial Services Commission (FSC) <\/span><a href=\"https:\/\/www.yna.co.kr\/view\/AKR20250224061800002?section=economy\/all\"><span style=\"font-weight: 400;\">reportedly announced<\/span><\/a><span style=\"font-weight: 400;\"> Monday. The government said it has completed regulatory revisions and system upgrades to enhance oversight and prevent market distortions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To limit excessive volatility, the FSC will temporarily expand the designation of \u201coverheated short-selling stocks,\u201d allowing authorities to halt trading on equities that experience sharp increases in short-selling volume. Regulators said the move aims to prevent market instability, particularly for mid- and small-cap stocks that may face concentrated short-selling pressure.<\/span><\/p>\n<p><b>WHY IT MATTERS<\/b><\/p>\n<p><span style=\"font-weight: 400;\">South Korea\u2019s repeated delays on short selling have raised concerns about regulatory consistency, and investors will closely monitor whether authorities follow through on the March 31 reinstatement without further disruptions. The government\u2019s <\/span><a href=\"https:\/\/koreapro.org\/2024\/01\/yoon-suggests-short-selling-ban-extension-amid-political-tensions\/\"><span style=\"font-weight: 400;\">past extensions<\/span><\/a><span style=\"font-weight: 400;\"> of the ban \u2014 despite earlier assurances of its expiration \u2014 have already eroded confidence in South Korea\u2019s financial policymaking. Any missteps in execution or abrupt regulatory interventions could further cement perceptions that Seoul\u2019s financial markets are unpredictable and politically reactive, particularly ahead of South Korea\u2019s inclusion in the <\/span><a href=\"https:\/\/koreapro.org\/2024\/10\/south-korea-to-join-major-bond-index-opening-doors-for-foreign-investment\/\"><span style=\"font-weight: 400;\">FTSE Russell World Government Bond Index<\/span><\/a><span style=\"font-weight: 400;\"> later in November.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Global institutional investors, who rely on short selling as a risk management tool, have been scaling back exposure to South Korea due to the extended ban. The return of short selling is a litmus test for whether Seoul is serious about aligning with global market norms or whether additional trading restrictions \u2014 such as expanded short-selling suspensions \u2014 will undermine investor confidence. The short-selling resumption also coincides with mounting pressures on South Korea\u2019s economy, as the Bank of Korea (BOK) faces limited room for monetary easing amid rising inflation risks.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The won remains highly sensitive to foreign capital flows, and any market instability following the return of short selling could exacerbate currency volatility. If foreign investors react negatively, capital outflows could drive the won lower, raising import costs and fueling inflation, which would further constrain the BOK\u2019s ability to cut rates. A smooth execution of the March 31 policy shift could help reassure foreign investors, but any further disruptions or ad-hoc interventions may deepen skepticism about Seoul\u2019s regulatory direction.<\/span><\/p>\n<div class=\"content-tags\"><a href=\"https:\/\/koreapro.org\/tag\/business-economy\/\"><span class=\"tag\">Business &amp; Economy<\/span><\/a><\/div>","protected":false},"excerpt":{"rendered":"<p>South Korea will fully reinstate short selling across all 2,700 listed stocks from March 31, ending a 17-month ban that regulators introduced in Nov. 2023 to curb illegal trading practices and protect retail investors, the Financial Services Commission (FSC) reportedly announced Monday. The government said it has completed regulatory revisions and system upgrades to enhance [&hellip;]<\/p>\n","protected":false},"author":10407,"featured_media":2203375,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30],"tags":[24],"class_list":["post-2208500","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-briefings","tag-business-economy"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>South Korea to resume short selling in March but market risks remain high - Korea Pro<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/koreapro.org\/2025\/02\/south-korea-to-resume-short-selling-in-march-but-market-risks-remain-high\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"South Korea to resume short selling in March but market risks remain high - Korea Pro\" \/>\n<meta property=\"og:description\" content=\"South Korea will fully reinstate short selling across all 2,700 listed stocks from March 31, ending a 17-month ban that regulators introduced in Nov. 2023 to curb illegal trading practices and protect retail investors, the Financial Services Commission (FSC) reportedly announced Monday. 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