11/11/2023
[23-2 KTG News Briefing] Wk 10 Domestic affairs - (1/2)
Hi, this is KTG of KIC.
Today, we are sharing the first Korean domestic affairs of wk10.
< Concerns over Short Stock Selling>
November the 6th was the first day of the ban on short selling which resulted in Korea’s KOSPI and KOSDAQ indexes rising up to 5.66% and 7.34%, respectively. Secondary battery-related companies also recorded upper limits, creating a “bull market.”
Such short-stock selling refers to the practice of investment or trading strategy that speculates on the decline in a stock or other security’s price. It is an advanced strategy that should only be undertaken by experienced traders and investors. Short selling is said to be the main reason for the decline in stock prices as such a situation is lucrative for investors. . It is a highly unfair strategy as institutions have a lower mortgage ratio compared to individual investors. Moreover, the repayment deadline is unlimited. With the recent disclosure of large-scale illegal short selling cases of foreign investment banks, there have been growing calls for the abolition of this practice. Yet some still argue that short selling may play a role in protecting individual investors by reducing the bubble in stock prices by lowering volatility.
Concern of “debt investment” is rising again and, in response, risk management measures have been taken. However, prolonged ban on short selling could potentially undermine the international trust on the Korean stock market and cause foreign investors to leave, which could also damage individual investors. At the end of the day, debates on banning short-stock-selling are still pending, and government authorities should consider balancing the period of the ban.
Editor: Jong Hyun Lee
Proofreader: Kate
Design: Young Chan Park
Editor-in-Chief: So Yeon An
Deputy Editor-in-Chief: Jun Gyu Park
Reference: https://naver.me/xaofmSjU
https://naver.me/G0l20hcH
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