SEOUL – South Korea's main stock index witnessed an unprecedented rise on Monday, climbing by 5.6 percent as the nation reintroduced a prohibition on stock short selling, a move aimed at curbing illegal market activities.
According to Yonhap News Agency, the market soared 134.03 points, closing at 2,502.37 and marking its fourth consecutive day of gains. This rally was led by robust performances in technology and battery-related stocks. The day saw a high trading volume with 518.4 million shares worth approximately 14.94 trillion won (US$11.5 billion) changing hands, and stocks advancing significantly outnumbered those declining, with 743 gainers to 149 losers.
The reimplementation of the short selling ban, which will remain in effect until the end of June 2024, was announced on Sunday by financial regulators. They cited increasing market volatility and illegal short selling activities as the primary reasons for this decision. Lee Bok-hyun, the head of the Financial Supervisory Service, emphasized in a press briefing that the ban was necessary to ensure fairness for retail investors.
Analysts, including Kim Dae-jun from Korea Investment and Securities, have suggested that the local stock market may continue to ascend as the ban encourages investors to retain their shares.
Additional support for the market's surge came from the latest employment figures out of the United States, released on Friday, which indicated a rise in unemployment. This has spurred anticipation that the U.S. Federal Reserve might halt its interest rate increases, according to market observers.
Sector-wise, gains were broad with significant rises noted among major companies. POSCO Holdings, a leading steelmaker, leaped 19.18 percent to 522,000 won, while top battery manufacturer LG Energy Solution jumped 22.76 percent to 493,500 won. The chemical and energy sectors also enjoyed substantial growth, exemplified by LG Chem's 10.62 percent increase to 521,000 won and SK Innovation's 13.42 percent climb to close at 155,500 won.
Technology stocks also experienced a positive trend, with industry giant Samsung Electronics up 1.87 percent to 70,900 won and LG Electronics gaining 3.85 percent to finish at 105,300 won. In the automotive sector, Hyundai Motor ascended by 2.6 percent to 177,900 won, Kia increased by 1.8 percent to 79,000 won, and auto parts manufacturer Hyundai Mobis rose 4.59 percent to 228,000 won.
In currency markets, the South Korean won strengthened significantly, closing at 1,297.30 against the U.S. dollar, marking a three-month high.
The bond market also reflected the positive sentiment, with prices increasing as yields, which move inversely to prices, declined. The three-year Treasury yield dropped 7.2 basis points to 3.877 percent, and the benchmark five-year government bond yield fell 6.7 basis points to 3.954 percent.