‘Brexit’ seen as having lengthy market impact

The head of the country’s financial regulator said on Friday that the U.K.’s decision to leave the European Union would have a prolonged impact on the financial market.

“The ‘Brexit’, which is an unprecedented move to exit the European Union, will entail uncertainties and will likely have a long-term effect on the financial market,” said Yim Jong-yong, chairman of the Financial Services Commission, during his opening speech at a meeting designed to discuss market overhauls.

Yim also specified the follow-up measures aimed at easing the aftershocks of “Brexit.”

The primary area of focus is the corporate bond market, to provide companies with easier access to corporate bonds. A confirmed measure will be announced on Monday.

The acknowledgement of the impact represents a slight turn from previous comments that focused on warning against overreaction.

Alongside the “Brexit,” the chairman also cited other negative factors that will drag down the economy.

“Besides the ‘Brexit,’ the global financial markets face headwinds because of uncertainties surrounding policy direction in the United States and Japan, slow growth in China and plunging oil prices,” Yim said. “Concerns over shrinking exports, dim outlook for growth coupled with rapid aging and low birth rate also linger.”

When it comes to the local market, however, Yim said that the “Brexit”-driven impact has subsided.

He stressed that the government and the financial authorities keep up with monitoring.

“The Financial Services Commission and Financial Supervisory Service have formed an emergency response team operating around the clock to monitor market conditions,” he said. “In case of drastic turbulence, we will follow up with the measures that we already draw.”

The chairman touched upon financial reform, an area that has taken a back seat because of corporate restructuring and “Brexit” issues.

The regulator will evaluate the series of market overhauls undertaken by the FSC in July and August.

The FSC’s focus is to ease regulation to attract more foreign investment and foster fintech, or technology that makes financial services more efficient. “We will see how central areas such as deregulation and fintech projects are conducted and the outcome of the projects,” he said.

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