A meeting of top financial regulators, heads of securities-related institutions and top analysts takes place at the Government Complex Seoul, Monday, to check the latest development in the equity market. Yonhap
The recent decline in Korean stock prices has been somewhat excessive, even when accounting for the uncertainties linked to the anticipated change in U.S. leadership, financial authorities said, Monday.
They vowed to remain vigilant against both external and internal uncertainties impacting the stock market. As a countermeasure, the authorities urged stakeholders to promptly inject a 200 billion won ($143.49 million) fund into the market. This initiative is part of the government's Corporate Value-up Program, designed to stimulate market growth.
This analysis and the proposed countermeasures were prompted by the sharper decline of the Korean stock market compared to other exchanges following former U.S. President Donald Trump's victory in the Nov. 5 presidential election.
"The Seoul stock market has been unusually volatile recently, and we are committed to addressing uncertainties by taking prompt and effective measures," Financial Supervisory Service (FSS) Governor Lee Bok-hyun said during a meeting at the Government Complex Seoul to assess the latest developments in the equity market.
The meeting was joined by Financial Services Commission (FSC) Chairman Kim Byoung-hwan, Korea Exchange (KRX) Chairman and CEO Jeong Eun-bo, as well as the heads of relevant financial institutions and top market analysts.
The FSC chairman noted that uncertainties "remain high both domestically and internationally," adding, "We will maintain heightened vigilance and closely monitor market conditions."
The meeting was convened following a sharp decline in most global stock markets in response to Trump's victory.
Among them, the Korean stock market responded more sensitively to Trump's return, given his pledge to strengthen U.S. protectionist policies at the expense of economic partners.
From Nov. 6 to 15, the benchmark KOSPI fell 6.21 percent, while the secondary Kosdaq market retreated 8.8 percent.
During the same period, Taiwan's Weighted Index dropped 1.58 percent, while China's Shanghai Stock Exchange declined 1.66 percent. In contrast, Japan's Nikkei 225 rose 0.44 percent and the U.S. S&P 500 gained 1.52 percent.
Although the Korean stock market has been sluggish throughout the year, its decline has accelerated since the U.S. presidential election.
Against this backdrop, the FSC chairman called for the "swift implementation of the Value-up Fund," referring to a 200 billion won fund supported jointly by five organizations related to the stock market.
The five are the KRX, Korea Securities Finance Corp., Korea Securities Depository, Korea Financial Investment Association and KOSCOM.
They will launch the fund this week in collaboration with the private sector to support exchange-traded funds (ETFs) that track 100 securities classified under the Value-up Index.
Listed on the KRX, the index includes major companies such as Samsung Electronics and SK Hynix, as well as smaller firms deemed to have strong corporate value.
The Value-up Fund will also be used to support successful companies that were not included in the Value-up Index when it was introduced in September.
Meanwhile, the FSS chief cautioned against illegal trading or any activities that could worsen negative investor sentiment. "Such actions will be met with zero tolerance," Lee said.