SEOUL (Reuters) – South Korea’s financial regulatory agency said on Thursday that authorities intend to fully lift a ban on the short-selling of stocks in March next year, marking the first time this has been done in five years.
“We will aim to fully resume short-selling at the end of March next year by amending the law and preparing a system,” said Kim Byung-hwan, the chairman of the Financial Services Commission.
Since a full ban on short sales was applied to the domestic stock market in March, 2020, when the COVID-19 pandemic roiled global financial markets, authorities have been gradually lifting and then re-introducing the ban.
In the latest move, authorities re-imposed a market-wide ban in November, 2023, after finding illegal trades by some foreign banks and extended it through to the first quarter of 2025 to prepare a system able to detect illicit market practices.
In comments about the government’s ongoing capital market reforms, Kim told a press briefing he wanted big conglomerates to actively participate in the “Corporate Value-up Programme”.
So far, nine companies, including Hyundai Motor and financial firms, have submitted regulatory filings to disclose their plans to boost market value, out of more than 800 listed companies. The reform programme encourages companies to voluntarily introduce measures such as higher dividend payouts to shareholders to help address the undervaluation of local stocks.
Kim also said that authorities expected a soft-landing of real estate project financing, while vowing thorough management of financial risks at savings banks and rising household debt.
Authorities will closely monitor the impact of the U.S. Federal Reserve’s interest rate decision next week on domestic financial markets, Kim said.
(Reporting by Jihoon Lee; Editing by Ed Davies)
