“Recently, amidst the ongoing downturn in the domestic stock market, financial authorities held a ‘Stock Market Situation Assessment Meeting.’ They diagnosed that the decline might be somewhat excessive and indicated they would implement market stabilization measures if necessary.
On the 18th, Kim Byeong-hwan, the Chairman of the Financial Services Commission, conducted a stock market situation assessment meeting with related institutions such as the Financial Supervisory Service, Korea Exchange, and market experts. They reviewed the trends of both domestic and major international stock markets, the supply-demand conditions of foreign and institutional investors in the domestic stock market, and discussed future response directions.
Related institutions and market experts analyzed that the recent global financial market has seen increased volatility with investments concentrating in the U.S., following the ‘Trump Trade’ after the U.S. presidential election. The U.S. stock market, although showing a correction after reaching new highs, still carries high volatility depending on future policy trends. Other major countries are displaying varied trends due to differing expectations of benefits and drawbacks arising from the new U.S. administration’s policy changes, marking a high uncertainty in the global stock market environment overall.
For the domestic stock market, they acknowledged that while there is uncertainty in U.S. policies related to core industries and the economy’s high dependence on exports, the recent decline seems somewhat excessive, recommending a composed perspective.
In discussing the future course of action, they agreed that, given the high volatility in foreign investor supply and demand, institutional investors should make investment-related decisions from a medium- to long-term perspective and play a more active role in mitigating volatility in the domestic stock market.
Meanwhile, Korea Exchange and other related institutions announced plans to establish a 200 billion won value-up fund starting this week and initiate the creation of a second fund amounting to 300 billion won, which is expected to aid in improving the supply-demand situation in the domestic stock market.
Lee Bok-hyun, the Governor of the Financial Supervisory Service, emphasized that the recent market anxiety is somewhat excessive and that they would take sufficient and immediate actions when necessary to promptly contain market instability and strictly crack down on unfair trading exploiting market troubles. He also stressed ongoing tasks being closely monitored by domestic and foreign investors, such as constructing a short selling computer system and improving corporate governance.
Chairman Kim Byeong-hwan remarked that given the significant domestic and international uncertainties, the financial authorities would monitor the market trends meticulously with high vigilance, and urged related institutions to expedite the execution of the value-up fund. He further advised that public companies should focus more on communication with the market and investors through value-up disclosures amid this environment.
He also noted that financial authorities are prepared to activate market stabilization measures, such as exempting obligations to maintain credit finance collateral ratios and expanding treasury stock acquisition limits whenever necessary, and are considering more aggressive supply-demand stabilization measures depending on the situation.
Additionally, the financial authorities plan to continue efforts to improve the domestic stock market’s structure through capital market advancement policies.”