An example of the recent ban on Short Sell transactions.
If talking about the case of banning Short Sell transactions recently We have to talk about the South Korean stock market, which has banned Short Sell many times, and the most recent ban was on 5 November 2023 (until the end of June 2024).
Timeline of South Korea’s ban on short selling transactions
- 13 March 2020 Short Sell Ban for 6 months (Covid-19)
- 27 Aug. 2020 Ban extended for 6 months.
- 09 Dec. 2020 Review related laws/increase penalties
- 03 Feb. 2021 Ban continues until 02 May 2021.
- 03 May 2021 Short Sell can only be used for stocks in the KOSPI-200 and KOSDAQ-150.
- 06 Nov 2023 Ban Short Sell until 30 June 2024 (Naked Short Sell transactions were found in the previous period of 2023)
In terms of the impact from the latest ban, it was found that On the first trading day of 1 day after the announcement of the ban (Announced on Sunday 05 Nov. 2023, first day of trading on Monday 6 Nov. 2023) The KOSPI index has adjusted +6% and during the period 03 Nov. – 31 Dec. 2023. Index +12% If considering the data set of 38 bars before and after the ban, it will be found that the trading volume during 6 Nov. 2023-28 Dec. 2023 will be less than during 6 Sep. 2023-3. Nov. ’23 around -7%
Short Sell and the Thai stock market
As for short selling in the Thai stock market The proportion of value of Short Sell is as per the table as follows.
It can be seen that if we specifically consider the factor of increasing the value of Short Sell, it cannot be concluded that it has a negative effect on the direction of the movement of the SET without considering other factors such as profits of listed companies in the market, Fund Flow. foreigners, etc.
In summary : For Short Sell transactions, although it is still debatable as a whole, Is it more positive than negative? But it can be noted that in many markets, “Short Sell ban measures” have been used as a tool in cases where the market is highly volatile, such as in the case of the subprime crisis or South Korea’s short selling ban in 2023 after Naked Short Sell transactions occur, etc.
From the perspective of Kingsford Securities We consider short selling transactions in normal times to be a good market tool that balances prices and contributes to liquidity. However, questions arise today. Inevitably, the question is, is the market at this time normal or not? and unusual cases Issuing measures to control short sell transactions (either a ban/or a specific ban) will have a negative impact on liquidity that is likely to decrease further. Will it be more beneficial or not?
2024-02-03 03:45:00
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