SEOUL- The chief of South Korea’s financial regulator said on Monday the impact of lifting a short-selling ban in the stock market would be limited.
“It is difficult to predict, but even if there is any impact, it will be short-term,” said Kim Byoung-hwan, the chairman of the Financial Services Commission.
Kim said a market-wide ban on stock short-selling, imposed in November 2023, will be lifted fully on March 31, after confirming the new system of detecting illegal trade was working properly over the next month.
Authorities will also prepare temporary measures to respond to any excessive volatility in some individual stocks after the ban is lifted, Kim told a monthly briefing.
It will be the first time since March 2020 that short-selling is being allowed for all listed stocks in the South Korean stock market.
South Korea’s economy barely grew in the fourth quarter of 2024, as the country’s worst political crisis in decades hurts already weakened domestic demand and threatens to further sap growth in a year of rising external risks under a second Trump presidency.
In December, consumer and business sentiment dampened amid political chaos, after President Yoon Suk Yeol was impeached and suspended from duties over his short-lived bid to impose martial law, followed by the impeachment of Prime Minister Han Duck-soo.
That impact saw gross domestic product (GDP) expand just 0.1 percent from a quarter earlier on a seasonally adjusted basis, the Bank of Korea’s advanced estimates showed.
It was weaker than increases of 0.2 percent forecast in a Reuters survey and 0.5 percent projected by the central bank less than a week before Yoon’s Dec. 3 martial law edict.
