Hi Bergo
While I don't have a problem with what people do within the rules, I do wonder at the motives of those who really do short sell the physical shares.
There are many easy avenues to profit from a falling market, e.g. futures and options. Both of those can yield big profits, if the market falls as hoped for by the participant. But the big difference is that those methods do not 'hurt' anybody. In other words they profit from the fall but do not 'cause' the fall.
The only reason I can think of why people would borrow and sell physical shares (ie. true shorting) is a motive to deliberately depress the share price by artificial oversupply. In most cases hoping to prompt a panic share issue at low price that they can pick up on.
I would think that such deliberate manipulative action would be outside the law. But obviously the ASX and ASIC do not agree.
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