The Financial Services Commission (FSC) said it has decided to extend a ban on short selling for another six months. The FSC said the decision was based on growing concerns over possible market volatility due to the resurgence of Covid-19.
The government is likely to extend a ban on short selling as the Korean economy is expected to take a hit following a recent spike in Covid-19 cases. The six-month ban on short selling went into effect in March and was supposed to end on Sept. 16.
While the Korean economy has been hit by the coronavirus pandemic, and in a technical recession, the stock market is running far ahead as it nears an all-time record. This has people talking of a bubble, as the owner is walking slower than the dog.
With Korea's ban on short selling set to end in the middle of September, a debate is raging as to whether the practice should be allowed again given the volatility in the markets and a sense that investors betting on a fall could cause one.