South Korean Equities Navigate Post-Ban Rebalancing and Political Change
Author:
Matthew Unterman,
Managing Director
South Korea is about to elect a new president after months of political problems. The economy has been shrinking, and new tariffs from the U.S. are expected to hurt exports. Since the country ended its short sale ban in March, more investors have been betting against stocks. Short interest has gone up and borrowing stocks is getting more expensive. The new president will have to deal with a weak economy and global trade issues. Investors are watching closely to see how the market reacts.
After months of political turmoil, South Korea will elect a new president June 3rd, to succeed conservative Yoon Suk Yeol who was impeached after imposing martial law.
Propping up growth will be a primary task for the new leader. The shrinking of the South Korean economy in 1Q25 demonstrated the delicate state of business activity and consumer sentiment before exporters take on the full effect of Trump’s higher tariffs.
Unsurprisingly, short interest in the country has been steadily climbing higher since the 17 month-short sale ban was lifted on March 31, 2025.
SI % Float across all SK-listed equities has risen from 1.88% on 3/31/25, to 2.89% today.
SI $ Notional value across all SK-listed equities has risen from $3.6 Billion on 3/31/25, to $7 Billion today.
SI $ Notional value across all SK-listed equities has risen from $3.6 Billion on 3/31/25, to $7 Billion today.
Borrow rates give a glimpse into an important part of the cost to put on a short position in the region.
The average financing rate paid is 6% fee on a notionally weighted basis across all SK-listed equities, highlighting the less liquid stock borrow/loan market locally.
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