Kospi – Financial Treason & Crime

Yonhap, 03 May 2021

South Korea’s financial regulator said Monday the country will take stern actions against illegal activities involving stock short selling as it allowed a partial resumption of short selling after a 14-month ban.

The Financial Services Commission (FSC) partially lifted its ban on short selling of some listed stocks after it imposed a six-month ban on the trading strategy in March last year and later extended it to ease market routs caused by the pandemic.

Short selling is a trading strategy in which investors sell stocks they borrowed on the belief that share prices will fall in the near future. When the prices decline, they can buy back the stocks at lower prices, pocket the profit and return the shares to the original owner. Continue reading “Article: Regulator to take stern actions against illegal short selling”

04/25/202105/01/2021

Article: South Korea’s retail investor army declares war on short-sellers

Article - Media, Publications

South Korea’s retail investor army declares war on short-sellers

Song Jung-a, 25 April 2021

Jung Eui-Jung, a former South Korean bank employee, recalls his bitter experience as a novice stock trader more than a decade ago, when he lost Won25m ($22,000) after the small metal group he invested in was delisted.

“It is the past that I want to forget. Back then, I didn’t have much access to information. I was bound to lose in an environment tilted against amateur traders,” said the 62-year-old head of the Korean Stockholders’ Alliance, an advocacy group that represents about 44,000 retail investors.

But the tables have turned over the past year as retail investors have emerged as the dominant force in South Korea’s $2tn stock market, accounting for almost 60 per cent of daily turnover. With that heft, amateur traders have become a political force, seeking to even the odds against professional investors.

Mom-and-pop investors bought a net Won63.9tn of Korean shares last year, compared with a net sale of Won5.5tn in 2019. That helped propel the benchmark Kospi index up 118 per cent following a coronavirus-driven sell-off last March, making it one of the best-performing markets globally.

Almost one-fifth of Korea’s population of 52m dabbles in stocks, and data showed local brokerages have amassed Won76tn in cash deposits.

“The market dynamic is changing fast with individual investors becoming a powerful force that even hedge funds should be afraid of,” said Albert Yong, managing director at Petra Capital Management, a Seoul-based investment firm.

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04/06/202105/01/2021

Article: Tougher penalties come into force for naked short selling

Article - Media, Publications

Tougher penalties come into force for naked short selling

Choi Jae-hee, 06 April 2021

Investors engaged in naked short selling will be fined up to 100 percent of their order amount, the nation’s top financial regulator said Tuesday.

According to the policymaking Financial Services Commission, the revised Capital Markets Act, which imposes tougher penalties for naked short selling, has taken effect on the same day.

Short selling is a trading tactic where investors immediately sell borrowed stocks on a bet that share prices will fall, allowing them to later repurchase stocks and return them to the lender. Some investors sell stocks without borrowing, known as “naked” short selling, which is currently illegal in the local capital market. Continue reading “Article: Tougher penalties come into force for naked short selling”