South Korea extends short selling ban for six months

From the South Korea Financial Services Commission

TEMPORARY BAN ON SHORT SALE TO BE EXTENDED FOR SIX MONTHS

The FSC announced its decision to extend the temporary ban on stock short sale for six monthsfrom September 16, 2020 to March 15, 2021, given market volatility amid concerns over a resurgence in COVID-19 cases. The lifting of share buyback limits for listed companies will also be extended during the six-month period.

In the meantime, the FSC plans to draw up regulatory improvements to strengthen penalties on illegal short sale activities and improve the accessibility of retail investors to the short sale market.

The Financial Times noted that hedge funds were critical of the move: “’There is no reason to extend the ban, given that stock prices have recovered more than enough,’” said Albert Yong, head of Seoul-based Petra Capital Management. “’The move could inflate a bubble in the bio sector, which could cause bigger losses on retail investors later.’”

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