What is the Reality Behind the KakaoTalk Message 'Focusing on Short Selling After Gimpo'?

"Focus on Short Selling After Gimpo" Text Fact Check
Song Eon-seok "Copied and Delivered Media Inquiries"
Ruling Party's 'Strong Request' to Government Is True

As financial authorities announced a ban on short selling until the first half of next year, a heated debate has erupted over social media (SNS) messages exchanged between ruling party lawmakers. Many interpret the short selling ban policy as a 'sure-win card' by the government and ruling party to capture the wavering centrist votes ahead of next year's general election. Amid this, criticism arose labeling it a 'planned populist policy' after messages exchanged between ruling party lawmakers stating they would 'focus on short selling after Gimpo' were confirmed. Were these messages from the ruling party? To get straight to the point, it can be said that 'half is right, and half is wrong.'

According to political circles on the 7th, on the 2nd during the plenary session of the National Assembly Budget and Accounts Special Committee, a cellphone screen showing a message from Song Eon-seok, the whip of the People Power Party, to Jang Dong-hyuk, the party's floor spokesperson, saying, "We are planning to focus on short selling after Gimpo this time," was captured by media cameras.

There was an interpretation that the People Power Party's strategy for next year's general election was to target votes through the incorporation of Gimpo City into Seoul and the ban on short selling. Just before this text message appeared, last month, Yoon Chang-hyun, a People Power Party lawmaker, mentioned a 'temporary ban on short selling' during a National Assembly audit, and Kwon Seong-dong also posted on Facebook about the need to revise the short selling system, suggesting this was the spark for the 'short selling ban.'

On the 6th, when the temporary short-selling ban took effect, the KOSPI and KOSDAQ indices surged sharply. The KOSDAQ even triggered a sidecar for the first time in 3 years and 3 months. Photo by Heo Younghan younghan@

Is the subject of 'Gimpo focusing' the People Power Party? "No"

However, Song denied that he was the subject of 'focusing on short selling' in the message. After the message was reported, he explained at the meeting, "A certain media outlet contacted me asking if there would be a member who would question about short selling today, so I sent the message to Spokesperson Jang to share the information, which was exposed to the camera."

Spokesperson Jang also immediately clarified at the meeting. He said, "It was not Mr. Song's opinion but a process of forwarding a reporter's message to me, and I also received the same message from the reporter around the same time asking whether there would be a question, so I can confirm that anytime." Despite this explanation, reports citing only the message content continue to claim that 'the People Power Party is focusing on short selling.'

However, it is true that the ruling party strongly requested the government to temporarily ban short selling. On the afternoon of the 5th, during a closed-door high-level party-government meeting, Yoo Ui-dong, the chairman of the policy committee, said at a briefing held at the National Assembly, "At the (high-level party-government) meeting, the party strongly urged the government to improve various institutional problems pointed out regarding short selling." About an hour later, at 5:30 p.m. the same day, the Financial Services Commission announced a plan for a temporary ban on short selling.

Ruling party's strong request for 'short selling ban' is true... but they deny it as a 'general election strategy'

Kim Ki-hyun, leader of the People Power Party, is speaking at the Supreme Council meeting held at the National Assembly on the 6th. Photo by Kim Hyun-min kimhyun81@

Following recent exposure of illegal short selling by global investment banks (IBs) and subsequent audit inquiries, it is known that Representative Kim Ki-hyun showed direct interest in the short selling issue. A People Power Party member of the Political Affairs Committee explained, "Representative Kim called and basically agreed with the temporary ban on short selling but asked if there might be any side effects, and we had a long conversation. As audit inquiries arose in the Political Affairs Committee, a consensus was formed, and it was effectively adopted as the party's stance, which was then conveyed to the Financial Services Commission, leading to the implementation of the measure."

The People Power Party also distanced itself from interpretations that the short selling ban was a 'vote-catching card' aimed at next year's general election following Gimpo City's incorporation into Seoul. A party official said, "(The short selling ban) is far from being a pre-election strategy. It aligns with government policy," adding, "It is an issue previously mentioned by Lee Jae-myung, the Democratic Party leader, and President Yoon Seok-youl." However, the official added, "It is a policy that scratches an itch and could influence the general election."

Earlier, before assuming party leadership, Lee visited the Korea Exchange on July 25 last year and said, "There is a need to temporarily ban short selling." President Yoon issued a message three days later on the 28th, saying, "We are determined to root out illegal activities surrounding short selling, and financial authorities and prosecutors should establish countermeasures."

Another member of the Political Affairs Committee said, "There have already been petitions to the committee regarding short selling, and demands from individual investors have been raised to our lawmakers via text messages," adding, "(The short selling ban) has been a matter of ongoing consideration. Whether it is an election strategy or not, if public sentiment demands it, it cannot be ignored, and even if it is an election strategy, there is no problem with that."

The opposition criticized the short selling ban as a 'hasty policy for the general election.' Lee So-young, a Democratic Party lawmaker, pointed out on CBS Radio that combining the short selling ban and Gimpo's incorporation into Seoul, "I see both policies as procedurally very hasty and planned populist policies prepared for short-term political gain."

The People Power Party also hinted at the possibility of presenting another megaton-level issue. Park Jeong-ha, the chief spokesperson, told reporters after the Supreme Council meeting the day before, "I find it hard to agree with some criticisms that (the short selling ban) was hastily prepared," adding, "Please view it from the perspective of normalizing the stock market and resolving Korea discount." Park also said, "We will boldly find and continue to speak out about things we have been enduring. The work to remove the thorn under the fingernail will continue."