Lee Bok-hyun, Governor of the Financial Supervisory Service, stated, "If financial market instability is resolved within a few months, we will consider lifting the short-selling ban within the year as much as possible."
Governor Lee made this remark in an interview with Bloomberg on the 29th, explaining, "We will definitely take measures to make Korea an attractive market for foreign investors."
Previously, financial authorities banned short selling in March 2020 as the stock market fluctuated due to the spread of COVID-19. Since May 2021, the ban on short selling has been lifted only for the constituent stocks of the KOSPI 200 and KOSDAQ 150 indices. Some view the short-selling ban as an obstacle to Korea's inclusion in the Morgan Stanley Capital International (MSCI) developed markets index.
Governor Lee expressed hope for inclusion in the MSCI developed markets index next year, saying, "I am well aware that there is much to be done to meet the criteria." He added, "2023 will be a long year for regulatory easing."
Regarding concerns over real estate project financing (PF) defaults, he said, "Some projects may eventually become insolvent, but we are working to disperse the ripple effects," and warned, "If major financial companies or large construction firms collapse due to increased interest burdens or counterparty defaults, it could cause systemic problems in the Korean economy and financial markets."
Meanwhile, Sohn Byung-doo, Chairman of the Korea Exchange, also mentioned in an interview with the same media on the 17th that a complete lifting of short-selling regulations is necessary.
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