FSC Head Remarks Short Selling Could Resume in 1Q 2025 and Launch of Financial Investment Income Tax

• On 27 May, Lee Bok-Hyun (Head of FSC) remarked that short selling of stocks in Korea could resume sometime in 1Q -4Q 2025.

• The centralized system to detect short selling of stocks in Korea on a live basis could be completed as early as 1Q 2025.

• The financial investment income tax is likely to be LAUNCHED in January 2025, which could negatively impact the local stock market.

FSC Head Remarks Short Selling Could Resume in 1Q 2025

On 27 May, Lee Bok-Hyun (Head of the Financial Supervisory Service) went on a radio show (MBC) where he remarked that short selling of stocks in Korea could resume sometime in 1Q -4Q 2025.

There are two separate types of systems to detect short selling of stocks. The first one is operated by the brokers/investors themselves (both domestic and institutional investors/brokers). The second one would be a centralized, comprehensive system to detect short selling on a live basis. This latter centralized system could be completed as early as 1Q 2025. Once this system is in place, then the regulators are likely to officially announce the start of the short selling of Korean stocks once again.

This statement by Lee Bok-Hyun is basically the same as the statement made by the South Korean Presidential Office in the past several weeks. Thus, Lee Bok-Hyun's statement today is likely to end any confusions about the start of partial short selling of Korean stocks sometime this year. In other words, even if FSC allows partial or full short selling of Korean stocks, the time frame is likely to be in 1H 2025, rather than in 2H 2024. The partial short selling refers to short selling of stocks included in major indices such as KOSPI 200 and KOSDAQ 150.

FSC Head Lee Bok-Hyun (MBC Radio program: 27 May 2024; in Korean) (Source: MBC, Youtube)