South Korea’s Financial Services Commission (FSC) has convened officials to assess financial market conditions amid the ongoing conflict in the Middle East.
FSC chairman Lee Eog-weon chaired the meeting, which included representatives from relevant government agencies and major financial institutions.
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Participants reviewed recent economic indicators and shifts in financial markets. They also noted the sharp rise in international oil prices since the beginning of hostilities.
The move comes as South Korean stocks recorded their steepest drop in 46 years, sinking 12% in a day, according to a Reuters report. The sell-off erased around $500bn in market value in a week.
The FSC meeting focused on possible support measures for small and medium-sized exporters with exposure to the conflict zone.
Officials noted that, depending on how the situation evolves, financial markets could face further bouts of volatility. They cautioned that this could spill over into the real economy.
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By GlobalDataThey stressed the need for constant monitoring, closer inter-agency communication and coordinated action if conditions worsen.
Lee said that, despite the heightened external risks, the domestic economy and financial system are “equipped with strong fundamentals” and that the government has adequate policy capacity to deal with such uncertainties.
The FSC noted that the government, the Bank of Korea and the Financial Supervisory Service will continue to track developments closely and move quickly to deploy contingency measures if needed.
In addition, the financial authorities plan to tighten surveillance of trading behaviour.
This is aimed at preventing “a potential of unfair trading activities spreading on heightened market uncertainties and investor anxieties” through practices such as market manipulation or other forms of unfair dealing in capital markets.
To reinforce coordination, the FSC intends to establish a joint taskforce on the Middle East conflict. The body will be tasked with sharing information among relevant agencies in real time and maintaining round-the-clock monitoring of the situation.
