South Korea's ban follows a period of naked short-selling — the practice of selling short before investors even possess the shares — roiling the market and causing widespread dissatisfaction among investors. This policy gives the state time to crack down on such activities and imposes harsher punishment on global investment banks who take advantage of regulation that is badly in need of reform.
While some banks misuse short-selling, banning the practice undermines South Korea's reputation as a desirable market for foreign investment. Its government has done little to become a private sector-led economy — as previously pledged — and has seen stagnation compared to the likes of Japan. A ban like this is not the solution to the country's market problems.