FSC head tries to calm investors, but Kospi keeps sinking

Chairman Choi Jong-ku of the Financial Services Commission speaks during an audit held at the National Assembly in western Seoul on Friday. [YONHAP]

Faced with heavy losses on the stock markets, the head of the Financial Services Commission (FSC) attempted to calm investors Friday, saying that capital markets remain sound.

However, Choi Jong-ku, chairman of the FSC, acknowledged that Korean markets are seeing greater volatility than other Asian markets.

“Along with the United States, Asian markets move in a similar manner, but Korea appears to experience somewhat bigger fluctuations,” Choi said during a national audit.

“But there is no problem in market soundness in general.”

Despite that positive message, the Kospi again dipped to a new low for the year on Friday and, at one point, was on the brink of falling below the psychologically-significant 2,000 level.

The Kospi shrank 1.75 percent to close at 2,027.15 compared to the previous trading day, marking the fourth consecutive yearly low.

In early trading, the Kospi tumbled as low as 2008.86 but recovered later on.

The tech and bio heavy Kosdaq suffered steeper losses, losing 3.46 percent to reach 663.07.

Other Asian markets also fell into negative territory amid concerns about the ongoing trade war between China and the United States and rising interest rates in the United States. But as noted by Choi, their losses were less drastic with the main indexes in Japan and China inching down less than 1 percent.

“For any meaningful rebound, either the trade dispute or the pace of the Fed’s rate rises needs to be addressed,” said Lee Eun-taek, an analyst at KB Securities.

Still, the steeper decline in Korea triggered some worries that weak economic indicators were to blame.

Korea has seen weaker-than-expected performances in gross domestic product growth, jobs data and investment.

An index showing the volatility of Kospi’s major stocks, known as VKOSPI, reached a nine-month high on Friday.

Choi said that the financial regulator works on devising measures with related agencies and government departments to ease recent market volatility.

“[The FSC] carefully monitors and oversees financial companies’ fiscal soundness and foreign currency transactions,” he said.

“But these efforts appeared not sufficient,” he continued, “so we are in discussions with related government bodies to respond to market fluctuations.”

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]