South Korean stocks fell 3% as the country officially lifted its short selling ban imposed in November 2023. The move is expected to boost foreign investment and improve market liquidity. Short interest is concentrated in the industrial sector, with Ecopro BM, Ecopro, and Posco among the most shorted stocks ahead of the policy shift.

South Korean stocks fell ~3% on Monday, as impending US reciprocal tariffs and the local short selling ban officially being lifted caused some market angst.

The short sale ban was officially imposed back in November 2023.

The lifting of the short selling ban should attract foreign investment back to S Korea, allowing speculative and hedging activity, improving overall market liquidity.

The re-instatement of short selling is also seen as a step toward the country achieving developed market status from MSCI.

Top 10 most shorted S Korean listed equities in terms of SI Notional, SI % Float and DTC leading into today.

SI $ Notional:

SI % Float (min $25mm notional):

Days-to-Cover (10D ATV)

Ecopro BM (247540 KS), Ecopro (086520 KS) and Posco (003670 KS) all stand out as the most targeted stocks by shorts.

All 3 companies are within EV battery/renewable energy supply chain industry, which is classified under the Industrials Sector.

Of the $3.7 billion currently on the short side in SK, Industrial names account for $1.2 billion, or close to a third of all short exposure.

SI $ Notional:

SI % Float:

The end of South Korea’s short selling ban marks a major shift for its equity markets, signaling an effort to attract global investors and secure MSCI developed market status. While the near-term market reaction has been negative, increased liquidity and hedging opportunities may stabilize investor sentiment in the long run.

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