Short selling is a strategy where an investor first borrows shares of a stock from a broker and sells them, in anticipation of a drop in price. The investor will then have to buy shares at a lower price and then return them to the broker, profiting from the difference. “For the PSE’s upcoming initiatives, PSE is set to launch short selling within the month.
Only PSE index stocks, mid-cap index stocks, dividend yield index stocks, and exchange-traded funds will be eligible securities for shorting. Securities can be shorted if the number of shares that have been sold short and remain outstanding is less than or equal to 10% of its total shares. This is known as the short interest ratio. If a security exceeds this 10% limit, it can’t be shorted until it falls back below this threshold., Monzon already said he was “optimistic that this facility will lend support to our securities borrowing and lending program and help improve liquidity in our market.
Now, Monzon said the PSE is preparing market participants by conducting several webinars. A webinar with retail investors is scheduled on Friday, October 6. Other more developed financial markets in Asia – including Singapore, Malaysia, Indonesia, Thailand, and Hong Kong – have already allowed short selling for years.Lance Spencer Yu is a multimedia reporter who covers the transportation, tourism, infrastructure, finance, agriculture, and corporate sectors, as well as macroeconomic issues.Thought Leaders