Korea has resorted to unconventional measures to tackle questionable short-selling practices and market manipulation. It’s important to note that this isn’t a novel issue in Korean markets, and the focus of Seoul authorities is primarily on curbing heavy short activity in a few major companies.

The Korean Kospi index saw a significant boost as a result of these measures, pressuring short sellers to cover their positions by going long. We are currently deliberating whether it’s time to exit our KRW position.

We suppose the Chinese authorities have been monitoring the price action in the Kospi with enthusiasm as it popped 5%

Chart 1: Kospi vs USDKRW