BACK in the 1980s and 1990s, short-selling was hugely frowned upon in the local market, to the extent that there were often calls for it to be banned outright. Since then, much progress has been made. Regulators here have recognised that while controversial, shorting is nevertheless a valid trading strategy. It should be allowed, though not necessarily encouraged, and is best dealt with by carefully calibrated measures built into the market's microstructure (such as punitive buying-in penalties) and proper disclosure.

However, regulations and the official disclosure framework can only do so much. Given the present extremely bearish sentiment, which makes shorting very conducive, it is incumbent on companies themselves to formulate formal action plans if and when they find themselves the targets of a short-selling attack. In the case of intraday shorting though, there is little that companies can do to defend their share prices. The best they can hope for is that the Singapore Exchange's (SGX) circuit breakers help limit the damage; in any event, the need to buy before 5pm should lend some stability.

Moreover, under SGX's rules, all short-sales must be marked as such, so there is at least some disclosure of intraday short-selling positions to help investors.