The practice of short selling and its justification

Short selling is a trading practice where investors borrow stocks from brokers and sell them, anticipating a price decline. It allows them to profit from falling stock prices. During financial crises, regulators might ban short selling to prevent further market collapse. South Korea has a history of imposing such bans, and it has recently banned short selling until June 2024. The ban is claimed to be a preventive measure against illegal naked short selling, where brokers assume the availability of stocks for borrowing without proper checks. However, some speculate that the ban might be politically motivated, catering to the sentiment of retail investors in the upcoming election.