Chairman Lee Eog-weon of the Financial Services Commission presided over a meeting with officials from related authorities and financial institutions to check financial market conditions over the Middle East situation on March 3.
At the meeting, officials went over the economic and financial market conditions ahead of the market opening of the day amid expanding geopolitical uncertainty in the Middle East region. Officials also discussed ways to provide assistance to the small- and medium-sized exporters engaged in business operation in the conflict affected region.
The sharp increase seen in international oil prices on the previous day appear to have subsided somewhat, and major stock markets are mostly trending lower or staying flat, while the price of gold and the value of USD are strengthening due to higher demand for safe assets.
Since financial markets may experience expanded volatility depending on the developments of the Middle East situation with a potential impact on the real economy, officials shared the same view on the need to continue to stay vigilant and ensure close cooperation and concerted responses.
Despite deepening uncertainty surrounding the Middle East, FSC Chairman Lee said that the Korean economy and its financial markets are equipped with strong fundamentals and that the government has sufficient policy capacity to deal with external uncertainties. In this regard, Chairman Lee said that it is important for market participants to remain confident and avoid hasty decisions or movements.
Since ensuring stability in the economy and financial markets is a top priority, the government, the Bank of Korea, and the Financial Supervisory Service will maintain close coordination to monitor market situations and ensure prompt implementation of contingency plans (market stabilization programs worth KRW100 trillion-plus) when it becomes necessary.
Additionally, to prevent a potential of unfair trading activities spreading on heightened market uncertainties and investor anxieties, the financial authorities will closely look into market manipulation and other unfair trading activities in capital markets and bring stern penalties against rule-breakers.
In the meantime, Chairman Lee also discussed the need to provide financial assistance to the small- and medium-sized exporters doing business in the Middle East. Although the overall volume of exports to the Middle East is not high for Korea, there are individual companies whose exports are heavily concentrated in the region. In this regard, Chairman Lee said that policy financial institutions should actively make support available through their operation of financial assistance programs (KRW13.3 trillion) already in place. The Korea Development Bank (KDB), Industrial Bank of Korea (IBK), and Korea Credit Guarantee Fund (KODIT) are also urged to operate consultation desks to make sure a seamless provision of assistance to affected businesses.
The FSC plans to set up and operate a joint taskforce on the Middle East conflict situation to ensure the real-time sharing of information among related authorities and maintain close monitoring of developments around the clock.
* Please refer to the attached PDF for details.