Skip to content
Subscriber Only

The Country With the World’s Longest Short-Selling Ban Is Risking a Market Fall

  • Korea extended short-selling ban imposed March 16 until May 2
  • Traders lacking shorts option resort to using futures to hedge
The Yeouido financial district in Seoul.
Photographer: SeongJoon Cho/Bloomberg
Updated on

A growing number of fund managers and traders are worried that South Korea’s pandemic-imposed ban on short-selling, the world’s longest-such restriction, has artificially propped up the country’s stock market rally.

The decision this week to extend the short-selling ban imposed in March last year to tame pandemic-hit markets until early May will likely backfire, they said. Korea, whose benchmark surged last year and is up 8% in 2021, this week bowed to retail investor pressure and extended the ban on the key hedging tool, unsettling institutions.