Global Investors Eye Korean Stocks
as Short Selling Set to Resume March 31
Global investors are focusing on the Korean stock market ahead of the full resumption of short selling.
According to Bloomberg News on the 24th (local time), global asset management firm Pictet Asset Management stated that if short selling resumes in Korea, it will provide a means to manage risk, making it more likely for them to buy Korean stocks than before.
Headquartered in Geneva, Switzerland, Pictet Asset Management manages $288 billion (approximately 412 trillion KRW). John Widar, Pictet Asset Management’s Asia Special Responsibility Officer, said that some Swiss funds expecting global defense budgets to increase are preparing to buy shares of Korean defense companies.
He explained that although the stock prices of Korean defense companies may not continue to rise at the recent pace, "the earnings trajectory remains positive," citing companies like Hanwha Aerospace as suitable examples. He added that stocks related to value-up programs aimed at improving corporate value, such as Samsung Fire & Marine Insurance and bank stocks, could also be candidates for purchase.
Regarding short selling, he said, "They will short sell indices or engage in options trading rather than specific stocks," adding that "with the lifting of the short selling ban, short selling has become an inexpensive and rational strategy."
Bloomberg News evaluated the global funds’ interest in Korea ahead of the lifting of the short selling ban, stating, "The resumption of short selling could re-attract hedge funds using long-short strategies to Korea by managing risk."
Korea plans to resume short selling on all stocks in the stock market on the 31st of next month. This comes after a ban that lasted for 1 year and 4 months since November 2023. During this period, the Korean stock market has faced criticism from global investors for its low market accessibility.
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