This temporary restriction on short-selling should be viewed as an intervention similar to the way Central Banks intervene in the money markets.
Short selling will return with new rules. I expect the new rules will be aimed at reducing market volatility. I expect more disclosure and perhaps the re-introduction of the uptick rule.
Excessive volatilty is not good for equity markets. It increases equity premiums, which in turn discourages investment and affects the economy.
The authorities cannot ignore this issue. The economy is the primary concern. The rest follows.
