Short selling is a strategy where an investor borrows shares and sells them, planning to buy them back at a lower price to return to the lender.
How It Works
- Borrow 100 shares of Samsung at 70,000 KRW
- Sell immediately for 7,000,000 KRW
- Price drops to 60,000 KRW
- Buy back 100 shares for 6,000,000 KRW
- Return shares, profit: 1,000,000 KRW
Short Selling in Asia
Regulations vary significantly:
- Japan: Allowed with restrictions
- South Korea: Frequently banned/restricted during crashes
- China: Very limited, mostly through index futures
- Hong Kong: Allowed, actively used by hedge funds
- India: Allowed for institutional investors