Financial Services Commission "Extension of Short Selling Ban... Temporary Measure Due to COVID-19"

Financial Services Commission Chairman Eun Sung-soo is delivering opening remarks at a meeting with the securities industry held at the Korea Financial Investment Association in Yeouido, Seoul, on the 27th. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Park Jihwan] The Financial Services Commission recently announced that it will swiftly pursue multifaceted institutional improvements to resume short selling, following its decision to extend the ban on short selling for six months.

On the 30th, the Financial Services Commission released reference materials emphasizing that "the extension of the short selling ban is a temporary measure in response to the novel coronavirus disease (COVID-19)." The FSC made this clarification in response to criticisms that the extension was a sacrifice of market efficiency aimed at appealing to individual investors' sentiments.

It was originally planned to implement various institutional improvements based on issues that arose during the operation of the system throughout the short selling ban period, but these were not completed.

Currently, concerns are being raised that the extension of the short selling ban might be fueling a stock market bubble and spreading negative perceptions among foreign investors. In response, the FSC stressed, "We will make every effort to sufficiently explain these points to foreign investors to minimize negative perceptions."

Furthermore, although the domestic stock price has shown a higher increase rate compared to other countries from its low point this year (60.8% as of the 27th), the price-to-book ratio (PBR) and price-to-earnings ratio (PER) remain lower than those of major countries, and the gap has not narrowed compared to the pre-COVID-19 period.

This content was produced with the assistance of AI translation services.