Global brokerages are asking Seoul firms whether regulators might act overnight, as foreign selling of chip stocks pulls the Kospi back.
Foreign investors are worried that South Korea could again ban short selling without warning, The Korea Herald reported on Wednesday, 11 November, as the Kospi retreats from recent highs. Global brokerages have been calling local securities firms to ask whether regulators might impose sweeping trading curbs, according to industry sources quoted by the paper, which said the clients are more nervous about sudden intervention than about volatility itself.
The concern follows heavy foreign selling of Korean shares, particularly the chipmakers behind the market's AI-driven rally. Foreign investors sold US$5.7 billion (7.6 trillion won) of Samsung Electronics and SK hynix stock between 2 and 6 November. Foreign ownership of Samsung fell to 45.95%, its lowest in about 17 years, and of SK hynix to 48.27%, a five-year low. The Kospi briefly dipped below 5,000 on 6 November before closing at 5,059.69. Authorities held an emergency meeting and introduced a three-month exemption from collateral maintenance rules on margin lending, effective from 9 November.
The memory is the November 2023 blanket ban on short selling, which the Financial Supervisory Service announced on a Sunday, a day before it took effect, catching foreign banks and hedge funds off guard. The paper reported that the episode hurt Korea's effort to be upgraded to developed-market status by index provider MSCI.
The Korea Herald said the worries do not indicate that regulators are preparing another ban; industry officials said the 2023 experience has made foreign institutions particularly sensitive to sudden policy changes in a downturn. Some also questioned whether the government's stabilisation measures have substance, citing past announcements of market support funds that were never deployed.
