SEOUL (Reuters) - South Korea on Tuesday dramatically tightened rules on short-selling for three months, one day after its main equities board saw a record outflow by foreign investors as the coronavirus epidemic ravages the country’s economy.

People wearing masks to prevent contracting the coronavirus cross a street in downtown Seoul, South Korea March 9, 2020. REUTERS/Heo Ran

Starting March 11, stocks with a sudden and abnormal increase in short-selling transactions will be suspended from further short-selling for 10 days. The current rule calls for short-selling to be suspended for just one day.

The rules will also kick in for a wider range of stocks, the Financial Services Commission said.

Stocks in the main KOSPI index that drop 5% or more and see daily short-selling transactions increase by three or more times than the average of the previous 40 days will be subject to the new rule. Currently, the rule only applies if the daily amount of short-selling transactions jumps by 6 times or more.

Seoul shares tumbled more than 4% on Monday, with foreigners selling a record net 1.313 trillion won ($1.1 billion) worth of shares on the main board, preliminary data from the Korea Exchange showed.

The planned clampdown on short-selling helped the market recover some ground on Tuesday with the benchmark KOSPI .KS11 ending up 0.4%.

“The short-selling of stocks has increased this month,” the commission said in a statement. “We will sternly, swiftly deploy appropriate measures according to contingency plans prepared in advance as we monitor markets.”

Vice Finance Minister Kim Yong-beom also vowed to implement additional market stabilizing measures to curb speculation if needed, according to a statement released after a policy meeting in Seoul.

Kim said the government would go “all out” to contain market volatility and would take measures if herd-like behavior was seen in the currency market.

Asia’s fourth-largest economy, which with more than 7,500 new coronavirus cases has the second-highest number outside China, has drawn up a supplementary budget worth 11.7 trillion won ($9.7 billion) to counter the impact of the outbreak.

Indonesia last week suspended all short-selling of stocks amid capital outflows linked to the coronavirus outbreak.