VERBAL WARNING FROM THE GOVERNMENT Earlier today, the Korean government and financial authorities held an emergency meeting to discuss Monday’s market crash and warned for excessive moves in the country’s financial market.“This was an uncommon situation in which only the stock market took a hit from corrections triggered by external shocks,” Korea’s Finance Minister Choi Sang-mok said in a meeting with Bank of Korea Governor Rhee Chang-yong, Financial Services Commission Chief Kim Byoung-hwan, Financial Supervisory Service Governor Lee Bok-hyun and others on Tuesday morning.“The government and Bank of Korea are well-positioned to take necessary measures against external shocks and market volatility.”They shared a view that Monday’s rout was an overreaction to concerns about the US economy, the yen-carry trade, geopolitical risks in the Middle East and Big Tech’s high valuation and asked market participants to remain calm and make rational decisions, according to a statement issued after the meeting.
Their holdings accounted for 1.9% of total foreign investors’ holdings of Korean stocks but their disposal of Korean stock to cover losses from carry trading would exacerbate shock to the Korean stock market in combination with other foreign capital flights, market analysts said.
Market analysts warn of more capital flights from the Korean stock market if Japanese investors cash out on their Korean stock holdings to unwind their carry trade.
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