Comment on China just did the one thing everyone knows dumb governments do when there’s a crisis: ban shorts

China just did the one thing everyone knows dumb governments do when there’s a crisis: ban shorts

The first sign of a full-blown crisis is when the government tries to ban short-selling, and China is no exception. Short-sellers borrow stocks and immediately sell them off, reasoning they can buy them back at a lower price in the future and pocket the difference. But their negative bets put downward pressure on stock prices.

 

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