Lee Jae-myung, ‘Heart of Stock Market Capitalism’ Foreign Stock Market Short Selling Doubles ‘Plummet Betting’

Lee Jae-myung, ‘Heart of Stock Market Capitalism’ Foreign Stock Market Short Selling Doubles ‘Plummet Betting’

On the 20th, the KOSPI of the Korean stock market reached an all-time high of 3021.84 despite the global stock market decline, and foreign institutional investors doubled their short selling in two and a half months betting on a bear market, accumulating 7.4402 trillion won in KOSPI and 3.2454 trillion won in KOSDAQ, foreshadowing a plunge.

Foreigners who took advantage of President Lee Jae-myung’s strategy of “the stock market is the heart of capitalism” and “KOSPI index 5,000” led the stock market uptrend, and while individual investors followed suit and bought, they created the highest KOSPI uptrend among G20 countries for a week during the Iran war. In reality, they significantly increased the short-selling balance betting on a downtrend by foreign institutional investors, doubling the amount from March 31 to March 16, with short-selling in KOSPI reaching KRW 7.4402 trillion and in KOSDAQ reaching KRW 3.2454 trillion. This is expected to accelerate the large-scale downtrend of the downtrend.

In order to attract foreign capital, the government strengthened the policy of allowing short-selling in order to meet the MSCI (Mosun Stanley Capital International) conditions for inclusion in advanced country indices, and on the 20th, MSC actually gave a “positive improvement” evaluation, and on that day, unlike the decline in the US due to the Iran shock, the Korean KOSPI rose by about 1.7%.

MSCI mainly classified Korea as an ‘emerging country’ based on foreign accessibility, and is attempting to upgrade it to a ‘country under observation’ in the ‘reevaluation’ announcement on the 25th, and this government has strategized its inclusion as an ‘advanced country’ next year.

Unlike Japan, which initially defined the Iran-Israel war situation as a ‘state of war’ and used a policy of evacuating its citizens by Self-Defense Forces planes, President Lee used a strategy of preventing the outflow of funds from the stock market by only announcing it as an ‘air raid’ while passing through the NSC right before attending the G7 in Canada.

Foreigners have driven up the stock market with net purchases of 4.3544 trillion won in Korea since the presidential election, while they have concentrated on increasing their short selling balance in May, recording a 90.02% surge to 7.4404 trillion won (as of the 16th) on the 16th of this month compared to 3.9156 trillion won on March 31st, the highest ever. The net short selling balance in the stock market increased by 15.27% from 6.4548 trillion won on May 16 to 7.634 trillion won on the 4th, the day after the presidential election.

See <Israeli interceptor ‘inventory’ on war scale, Iranian nuclear ‘information fabrication’, Korea ‘allows short selling’, June 20, 2025>