In today’s briefing:
- Korea Short Sell Ban: Background, Manipulation, Holdings, Flows, Short Interest, Implications
- Full Transcript of Korea FSC Briefing on Sudden Short-Selling Ban, Including Key Trading Insights
- Lee Family to Sell 2.6 Trillion Won in Samsung Companies to Pay for Inheritance Taxes
- EQD | KOSPI 200 SHORT-SELLING BAN: Upward Push and Pullbacks
- Samsung Founder Family’s Pre-Announced Block Deals: Contract Terms & Fresh Contextual Conditions
Korea Short Sell Ban: Background, Manipulation, Holdings, Flows, Short Interest, Implications
- Korea banned all short selling in March 2020 and resumed short selling only on KOSPI 200 and KOSDAQ 150 index constituents in May 2021.
- News reports indicate that there could be another short sell ban as soon as the coming week. Indications are that the ban could last 6 months.
- There are many implications of a total short sell ban including futures backwardation, market manipulation, and no emerging to developed market promotion.
Full Transcript of Korea FSC Briefing on Sudden Short-Selling Ban, Including Key Trading Insights
- There seems to be no immediate requirement to close existing contracts. However, even the chairman of the Financial Services Commission was unable to offer a definitive answer.
- The comprehensive investigation and prohibition of the customary naked short selling could lead to a rapid decline in overall market liquidity.
- The first is the short-term view, focusing on futures backwardation, and the second is the medium to long-term perspective, examining how the overall market liquidity decline will affect market flows.
Lee Family to Sell 2.6 Trillion Won in Samsung Companies to Pay for Inheritance Taxes
- Lee family plans to sell additional 2.6 trillion won worth of Samsung Group companies as part of their fourth installment of inheritance taxes.
- This inheritance tax share sale is likely to have a negative impact on Samsung Electronics, Samsung C&T, Samsung SDS, and Samsung Life Insurance.
- This may be just a coincidence but the regulators announced today a temporary ban on stock short selling which should help the Lee family to unload their shares.
EQD | KOSPI 200 SHORT-SELLING BAN: Upward Push and Pullbacks
- Banning short-selling for stocks will provide some propulsion to the KOSPI 200 INDEX but inevitably there will be pullbacks when strong resistance areas are reached.
- The index is joining a wide global equities bounce, it is not recommended to go SHORT soon. There is a chance it may pullback briefly this week (buy the dip?)
- Our models say the index can rise from 2 to 4 weeks, before reversing: resistance will be met at 320, 328 and (hard to reach) 349.
Samsung Founder Family’s Pre-Announced Block Deals: Contract Terms & Fresh Contextual Conditions
- Considering year-end dividends, it appears likely that the trading timing might extend beyond this year. In the previous case, the trade execution timing was one month before the contract expired.
- Short selling is prohibited. However, all four companies offer single-stock futures, which provide instruments for proactive positioning. Nevertheless, aspects to consider are likely to increase regarding trading convenience and liquidity.
- The potential for inadequate liquidity might increase the discounts for these deals, potentially offering us fresh trading opportunities. We should proactively prepare trading setups that consider these contextual conditions.
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