Short selling in Korea: the bans, the 2025 restart and how to track it

Updated September 2026 · Data through 2 September 2026

Few developed markets have switched short selling off and on as often as Korea. Since 2008 regulators have imposed four market-wide bans, the last of which ran for seventeen months and ended on 31 March 2025 with short selling restored for every listed stock for the first time since 2020. Because the practice is politically sensitive — retail investors blame it for declines, and the government has prosecuted foreign banks for naked shorting — Korea also publishes unusually detailed daily data on it. This guide covers the history, the current rules, and what the numbers since the restart show.

Four bans in seventeen years

• October 2008 – May 2009. A full ban during the global financial crisis. Lifted for non-financial stocks in June 2009; financial stocks stayed off-limits until November 2013.
• August – November 2011. A three-month ban during the European debt crisis.
• March 2020 – May 2021. The pandemic ban. Short selling returned in May 2021 only for the largest 350 stocks (KOSPI 200 and KOSDAQ 150 constituents).
• November 2023 – March 2025. Imposed after regulators found large-scale naked short selling by global investment banks. The government used the pause to build a central monitoring system and to align the rules for institutions with those for retail (shorter recall periods, collateral ratios). Short selling in all stocks resumed on 31 March 2025.

Current rules in brief

Only covered short selling is legal: the seller must have borrowed the shares first, and every short sale must be flagged as such. An uptick rule applies — a short sale cannot be executed below the last traded price — with exemptions for market makers and liquidity providers hedging their positions. Korea Exchange publishes, for every stock, the short-sale volume and value each day, split into uptick-rule and exempt categories, and the Korea Financial Investment Association (KOFIA) publishes daily stock-lending balances with a one-day lag.

Since the restart: 3–5% of turnover

Short sales made up 4.9% of the value traded in April 2025, the first full month after the restart, then settled into a 3–4% range for the rest of the year. In absolute terms they have grown with the market: ₩18 trillion in April 2025, ₩74.5 trillion in June 2026 (the record, in a month of record foreign selling), and ₩42 trillion in August 2026. August's 5.0% share of turnover was the highest full month since the restart. The share is higher on the KOSPI (5.1% in August) than on the KOSDAQ (3.4%).

KOSPI and KOSDAQ common and preferred shares. Turnover includes both the KRX main board and the NXT venue.

The last column matters for interpretation. Between a fifth and a third of short-sale value is executed under the market-maker exemption, which is hedging activity (for example, an ETF liquidity provider shorting the underlying) rather than a directional bet. Headlines that quote the total overstate the amount of genuinely bearish positioning.

Which stocks are shorted

By value, short selling is concentrated where the trading is: Samsung Electronics and SK hynix account for close to 40% of all short sales over the last twenty sessions. By share of each stock's own turnover, the picture is different — defence, semiconductor equipment and battery names lead.

Twenty sessions to 2 September 2026.

Stock lending: the ammunition gauge

Every covered short sale starts with a stock loan, so the outstanding lending balance is the ceiling on how much short exposure can exist. KOFIA's series goes back to 2008. The balance grew from ₩10 trillion at the end of 2008 to ₩62 trillion by 2019, fell during each ban (₩46.5 trillion at the end of 2020, ₩47 trillion at the end of 2024), and then exploded after the 2025 restart: ₩110 trillion at the end of 2025 and a record ₩194 trillion on 15 June 2026, before easing to ₩166 trillion on 1 September. Samsung Electronics (₩23 trillion) and SK hynix (₩20 trillion) are the largest balances.

* 2026 as of 1 September. Source: KOFIA, all listed stocks.

Two cautions. Lending balances are not the same as short interest: shares are also borrowed for ETF creation, arbitrage and settlement, and part of the 2026 rise simply reflects higher share prices (balances are valued at market). And the series moves slowly — it is a stock, not a flow — so it is better for judging the capacity for short covering than for timing.

How to use the data

• Read share of turnover, not the raw amount. A stock with 20–30% of its trading in short sales for weeks is being actively shorted; a large absolute number in Samsung Electronics mostly reflects its size.
• Strip out the exempt portion when a headline number looks alarming.
• Watch for a rising short share into a falling price, then a sharp drop in the lending balance — that sequence is what short covering looks like.
• Remember the political overlay. Korean regulators have shown they will suspend the practice in a crisis. A ban removes the short covering bid as well as the selling.

Short-sale figures are from Korea Exchange as processed by our pipeline. This article is general information, not investment advice.