Hong calm but vigilant as markets stableFinance Minister Hong Nam-ki said Korea was not directly affected by the conflict between the United States and Iran.
“Although we need remain alert regarding the situation, we have to be cautious in overemphasizing excessive anxiety,” Hong said during a minister-level meeting held on Friday.
He said currently local and overseas markets are showing signs of stabilizing since Iran attacked a base in Iraq where U.S. forces are stationed.
“We have not detected direct impact on the real economy or any signs of anomaly,” Hong said.
The minister noted that stocks have been rising since the tensions between the United States and Iran eased and that the local oil prices and foreign currency rates have been stabilizing.
“Most of all, there have been no damage inflicted on the Korean community as well as on Korean employees [in the Middle East],” Hong said.
The minister added the government will continue to monitor the situation, including market movement, as uncertainties in the Middle East still remain.
“And if needed, we will act without hesitation,” Hong said.
He asked the public and other economic participants to remain calm and trust the government’s preparation and contingency plans.
“Currently six joint government teams are monitoring the situation and are preparing on contingency plans,” Hong said.
The six teams are monitoring the safety of the Korean community in the Middle East, construction companies operating in the Middle East, shipping and logistics, financial markets, international oil prices and the real economy.
Earlier the government said it is running a 24-hour-a-day monitoring system and is prepared to take pre-emptive action as the situation develops.
Hong said the Korean stock market continues to swing upwards since rebounding from Wednesday’s drop after news of Iran’s missile attacks directed at U.S. troops in Iraq.
The Kospi closed at its highest since May last year.
The index ended the week at 2,206.39. The last time it was this high was on May 2, when it closed at 2,212.75. The Kospi gained 19.94 points or 0.91 percent on Friday compared to the previous day.
Over the last two days, it gained 55.08 points.
Analysts remain cautious.
“It is positive that the anxiety has eased as Trump commented on refraining from the use of military force,” said Ahn So-eun, an analyst at IBK Securities. “But there’s a need to re-evaluate the optimism in the financial market due to the recent situation.”
Ahn noted the sharp spread of anxiety in the financial market on Middle East geopolitical risk.
The analyst added that there are also other major issues still pending alongside the Middle East situation, including Brexit, Hong Kong and the U.S.-China trade conflict.
“While the United States and China have reached the first phase in their trade agreement, the market consensus is that it would be difficult in resolving the fundamental conflict,” Ahn said.
BY LEE HO-JEONG [firstname.lastname@example.org]