As short selling was fully resumed, the KOSPI and KOSDAQ indices started to fall simultaneously. Short selling is an investment technique that bets on a drop in stock prices, which had been banned since November 2023, leaving no way to remove the bubbles that formed during that time. With the ban lifted on the 31st, the pent-up demand for short selling appears to have exploded.
As of 9:14 a.m. that day, the KOSPI index plunged 62.51 points (2.44%) to 2,495.47 compared to the previous transaction day.
In the main securities market, foreigners are selling stocks at a rapid pace. Foreign investors led the decline by net selling 89.1 billion won. In contrast, individuals net bought 80.7 billion won, and institutions net bought 6.5 billion won.
Most of the top market capitalization stocks are flashing red. Samsung Electronics is down 1.16%, SK hynix is down 3.06%, LG Energy Solution is down 4.35%, and Samsung Biologics is down 2.00%.
This is interpreted as the fallout from the resumption of short selling. In November 2023, the government announced a ban on all short selling until a system to prevent large-scale illegal short selling by global investment banks was established. The borrowing short selling, which involves placing sell orders for stocks confirmed to be borrowed, was also not allowed.
The Financial Supervisory Service and the Korea Exchange created a system to detect illegal short selling after about a year and a half. Consequently, short selling resumed, and the short selling central monitoring system (NSDS) became operational from that day.
At the same time, the KOSDAQ index evaporated 16.65 points (2.40%) to 677.11 compared to the previous transaction day.
In the KOSDAQ market, individuals alone are selling stocks worth 11 billion won, while foreigners are purchasing 6.7 billion won and institutions are acquiring 4.4 billion won.
Among the top stocks, Alteogen (0.43%) and Peptron (2.94%) are rising, while ECOPRO BM (-4.06%), HLB (-3.85%), and Ecopro (-4.58%) are declining.
All sectors are on the downturn, with game entertainment (-4.87%), healthcare technology (-4.02%), and electrical products (-3.95%) showing significant declines.
That day, the won-to-dollar exchange rate in the Seoul foreign exchange market opened at 1,470.6 won, up 4.1 won from the previous transaction day.
On the most recent transaction day, the 28th, the New York stock market closed down across the board. The uncertainty surrounding the tariff policies of the Donald Trump administration heightened, along with growing concerns about an economic recession.
That day, the Dow Jones Industrial Average closed at 41,583.90, down 715.80 points (-1.69%) from the previous closing.
The Standard & Poor's (S&P) 500 index fell 112.37 points (-1.97%) to 5,580.94, while the technology-focused Nasdaq index dropped 481.04 points (-2.70%) to 17,322.99.
Over the past week, the S&P 500 index fell by 1.53%, the largest decline since the 10th of this month. The consumer sentiment index announced during the day fell to its lowest level since September 2022. The figure was lower than market expectations, raising concerns about a potential recession.
In individual stocks, large technology stocks fell across the board. Examples include Tesla (-3.53%), NVIDIA (-1.58%), Meta (-4.29%), Amazon (-4.33%), Microsoft (-3.02%), Alphabet (-4.88%), and Apple (-2.68%).