The iShares MSCI South Korea ETF (EWY), a U.S.-listed exchange-traded fund that tracks the South Korean stock market, is experiencing a significant surge in its value. This surge has the potential to make it the ETF's best day since April and potentially its best performance since 2020. The upswing comes after South Korean financial regulators decided to reimpose a ban on short selling.
As of midday trade in New York, the EWY is up 5% and is priced at $62.63 per share, according to FactSet data. Should the ETF continue to climb into the close, it will register its largest gain since January and potentially its largest gain since March 2020.
The remarkable performance of the EWY in U.S. hours closely followed an impressive session in South Korea. FactSet data reveals that the Kospi (KR:180721), an index of all common stocks traded on the Korean Stock Exchange, witnessed a 5.7% gain, marking its biggest advance since March 25, 2020.
Rally Boosts South Korean Stocks and Emerging Market Indexes
This rally in South Korean stocks had a positive impact on broader emerging-market indexes as well. Investors responded positively to regulators' decision to enforce a short selling ban until the end of June. The iShares MSCI Emerging Markets ETF (EEM) recorded a 0.8% increase in recent trading hours, reaching $38.76 per share.
Traders promptly closed their short positions following the announcement of the ban, which further contributed to the market's upward momentum, according to Shinhan Securities.
The decision to reimpose the ban was made by South Korean regulators to facilitate a deeper investigation into investment banks that were allegedly using short-selling tactics to generate higher profits. This move echoes a similar ban that was lifted earlier in 2021.
