The benchmark Korea Composite Stock Price Index(KOSPI) fluctuated in the early hours of trading on Monday as a ban on the short selling of listed stocks was partially lifted after 14 months.
The KOSPI fell 20-point-66 points, or zero-point-66 percent, to close the day at three-thousand-127-point-20.
Individual investors net purchased 586 billion won of shares while foreigners unloaded 441 billion and institutions net sold 136 billion won worth of stocks.
The ban, which was imposed to protect investors from a sudden market fall triggered by the pandemic, has been lifted on 200 large-cap firms listed on the main KOSPI and 150 firms listed on the secondary KOSDAQ.
Stock short selling is a trading strategy where investors sell stocks they borrowed on the belief that share prices will fall in the near future.
Retail investors can sell short after receiving related education and undergoing a mock investment session. Brokerages will be allowed to lend individual short sellers stocks by the end of this year. A total of 2.4 trillion won worth of stocks have been secured for this purpose.
Authorities will closely monitor the market and sternly deal with illegal short selling. Illegal short sellers will be slapped with a fine of up to 100 percent the ordered amount earned. They can also face more than a year in prison or fines of up to five times the wrongfully acquired profit.