Short-Selling Ban Sparks Biggest Rally in Korean Stocks Since 2020
- Kospi surges 5.7%, boosted by shorted stocks like LG Energy
- Ban ‘unusual’ in absence of a financial crisis: Eugene’s Huh
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South Korean stocks soared after the country reimposed a full ban on short-selling, a controversial move that regulators said was needed to stop the illegal use of a trading tactic deployed regularly by hedge funds and other investors around the world.
The nearly eight-month ban may help appease retail investors who have complained about the impact of shorting — the selling of borrowed shares by institutional investors — ahead of elections in April, several market watchers said. However, it could deter participation by foreign funds in the $1.7 trillion equity market and complicate Korea’s bid to seek a developed-market status in MSCI Inc.’s indexes.