Korea REIT Association Requests Short-Selling Exemption, Citing Market Distortion on July 22

According to Financial News, the Korea REIT Association on July 22 submitted recommendations to the Financial Services Commission and Korea Exchange requesting that listed REITs be exempted from short-selling regulations or subject to differentiated rules. The association manages 23 listed REITs with a combined market capitalization of approximately 8.3 trillion won.

The association contends that short-selling is disproportionately concentrated in the relatively illiquid REIT market, distorting prices that should be determined by net asset value and dividend yields. Data shows that in May, 9 of the top 50 short-selling concentrated stocks were REITs, and in April, 7 of 14 overheated short-selling stocks were REITs. Some REITs experienced days where short-selling accounted for over 50% of trading volume.