S. Korea mulls extending short selling ban

SEOUL, Oct. 23 (Yonhap) -- South Korea's financial watchdog said Thursday it plans to ban short selling of stocks for a longer than expected period of time, as the local market continued to slide despite stabilization measures.

In September, the Financial Services Commission (FSC) said it would ban short
selling of stocks "for the time being" in an effort to minimize the fallout from
international financial turmoil. The watchdog also said it would raise the daily
limit on share repurchases to 10 percent from the previous 1 percent.
When the ban ends "will depend on when the market stabilizes," said an official
at the FSC.
Short selling refers to the practice in which investors sell shares by borrowing
them in anticipation of price falls. Short sellers can make profits by buying
back shares at a lower price and then returning them. The practice has been
blamed for amplifying financial market jitters by sparking price falls.
The country's key stock index, the KOSPI, has lost nearly 40 percent this year as
foreign investors continued to pull their money out of local stocks amid a
deepening global financial rout.
On Wednesday, the KOSPI dropped 5.1 percent to close at 1,134.59.
The local currency continued to plummet Thursday morning against the U.S. dollar
as local stocks sank amid foreign selling. The won has lost about 32 percent to
the greenback so far this year.