Market largely stabilized after impeachment vote, says finance minister

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Market largely stabilized after impeachment vote, says finance minister

Published: 16 Dec. 2024, 17:03 Updated: 16 Dec. 2024, 18:22

SHIN HA-NEE
[email protected]

Audio report: written by reporters, read by AI

Minister of Economy and Finance Choi Sang-mok speaks during the Asean+3 Economic Cooperation and Financial Stability Forum held at the Bank of Korea in central Seoul on Dec. 16. [MINISTRY OF ECONOMY AND FINANCE]

Korea’s stock markets largely recovered recent losses thanks to stabilization measures and strong institutional buying, noted financial authorities, as the government continues to reassure market participants of the situation’s stability in the aftermath of President Yoon Suk Yeol's impeachment over his martial law declaration on Dec. 3.

The assessment by the financial authorities was made on Monday during an Emergency Meeting on Macroeconomic and Financial Issues chaired by Minister of Economy and Finance Choi Sang-mok, who doubles as deputy prime minister.

The financial market has largely stabilized, the Finance Ministry said in a release issued after the meeting, while acknowledging that internal and external uncertainties still remain high due to the ongoing impeachment proceeding and U.S. policy shifts.

The economic policy chiefs agreed to “promptly proceed with key policy drives including the Corporate Value-up Program, the World Government Bond Index inclusion, and the advancement of the financial and foreign exchange markets,” according to the ministry.

Following the meeting, Choi stressed, “Developments over the weekend have reduced uncertainty surrounding the procedures for resolving the current state of affairs,” in a celebratory remark during the Asean+3 Economic Cooperation and Financial Stability Forum that day.

“I am well aware of the concerns of the international community regarding Korea’s recent political situation,” noted Choi.

“I can confidently assure you that Korea’s economic system remains robust, and our emergency response mechanisms are functioning stably.”

Similar messages have been sent out to finance ministers and governors of international organizations through an emergency letter on Monday, as Choi offered assurances that the economic situation will remain stable despite the newly emerged political difficulties following the passage of the impeachment motion against President Yoon.

The finance minister also met with representatives of Korea’s six major business lobbying groups including the Korea Federation of Small and Medium Business (KBIZ), the Korea Enterprises Federation (KEF) and the Korea Chamber of Commerce and Industry that day.

Minister of Economy and Finance Choi Sang-mok, center, speaks during a meeting with representatives of Korea's six major business lobbies on Dec. 16. [MINISTRY OF ECONOMY AND FINANCE]

The government will “continue with tasks that must be done without falter or delay,” said the deputy prime minister during the meeting, promising to prioritize maintaining sovereign credit and address external uncertainties.

Choi requested the business lobbies to “take an active leadership role in ensuring that business operations are not disrupted and that investments, exports and hiring proceed as usual."

“Small businesses and the self-employed have been hit particularly hard with economic uncertainties persisting,” said KBIZ Chairman Kim Ki-mun during the meeting, and added that business groups should be included if a governing coalition between the government and political parties is launched.

KEF Chairman Sohn Kyung-shik said, “It is crucial to make sure that there is no vacuum in government affairs,” calling for “economic stabilization measures so that companies can continue to focus on investments and business.”

Despite the government’s continued reassurance efforts, the won-dollar exchange rate remains high amid persistent external uncertainties. As the local currency remains perpetually weak against the dollar, financial authorities plan to announce deregulation measures this month to mitigate the rising foreign exchange burden on banks.

Potential plans include delaying the implementation of a stricter rule mandating that lenders meet a stress capital buffer requirement that imposes up to an additional 2.5 percentage points to the current minimum capital adequacy ratio.

The rule was initially set to take effect before the end of this year, but with banks grappling with higher won-dollar rates pushing down their capital adequacy ratios, the financial authorities have been considering delaying its implementation.

BY SHIN HA-NEE [[email protected]]