By Cynthia Kim and Sangmi Cha
SEOUL (Reuters) - A swarm of online traders in South Korea is taking a leaf from the Reddit horde in the United States to quash a government plan to lift a pandemic-imposed ban on short-selling, triggering a rally in the most shorted-stocks such as Celltrion on Monday.
Almost 30,000 investors of the Korea Stockholders Alliance have come together at a membership-based forum at naver.com, signing online petitions and staging downtown demonstrations calling for permanent ban on short selling of shares.
The retail investors dubbed the movement as 'kstreetbets,' after Reddit's WallStreetBets forum where a rebellion of retail investors against Wall Street drove video-game retailer GameStop Corp (NYSE:GME). to dizzying heights last week.
"Save the ants! No to short selling! Why befriend short selling," read one of the banners put up by the forum.
"Do you call this a country? If you want to keep exploiting the citizens, better shutter the stock market!," one investor wrote.
Prime Minister Chung Sye-kyun on Thursday told Reuters restrictions on the key hedging strategy will eventually be "reinstated after addressing some of the problems caused by institutional investors."
In January, the country's financial regulator said its plan is to lift the Kospi and Kosdaq short-selling ban, which has been in place since March 2020, on March 15.
Some see the movement as a hot-button political issue, especially as it comes just two months ahead of hard-fought elections to pick the mayors of the two largest cities, Seoul and Busan.
President Moon Jae-in's Democratic Party is fighting to retain the mayor's offices as the main opposition conservatives pick up momentum with criticism of his failures to deliver on his economic policy pledges.
The self-styled "Jobs President", Moon is seeing jobs vanishing at the fastest pace in more than two decades while Seoul housing affordability is at its worst ever despite numerous property-cooling measures.
Mom-and-pop investors have emerged as dominant players in the local stock market during the pandemic and now account for nearly two thirds of the nation's trading value.
With the benchmark Kospi doubling since last year's lows, these retailers stand to lose against professional short-sellers if they exit their bearish positions.
"(The temporary ban) is likely to be extended," said Shin Yul, a political science professor at Myongji University in Seoul.
"This also has relevance with the election. There are so many stock traders, and any downturn in the stock market would mean reduced household wealth so the political circles will pay attention."
On Monday, shares of Celltrion, a South Korean biopharmaceutical company, jumped as much as 18.2% as retail investors were encouraging one another to shield the company that has often been a target of foreign short-sellers.
The benchmark Kospi was up 2.4% by 0500 GMT.