See More on Facebook

Economics

Korea dismisses economic crisis speculations despite signs

Policymakers claim ‘stock market overreaction’ while vowing for relevant contingency plan.


Written by

Updated: October 31, 2018

Despite hullabaloo in the stock market accompanied with pessimistic economic indices, the South Korean government on Tuesday denied the signs being the bellwether of another economic crisis.

While vowing to keep a stern eye on market fluctuations, top policymakers underlined that the bourse “overreacted” to external risk factors such as the US-China trade conflict and US rate hike gestures, and that it remains premature to go as far as activating a contingency plan.

“Considering the fundamentals of our economy, the recent responses (of the stock market) are in fact excessive,” Financial Services Commission Chairman Choi Jong-ku told reporters.

“The government is keeping a thorough watch on the current circumstances and will decide on its contingency plan according to market situations.”

On the previous day, the financial regulator had revealed a market stabilizing plan to inject some 500 billion won ($440 billion) into the stock market. Within hours after the policy announcement, however, the country’s bourse nose-dived with the top-tier Kospi closing at 1996.05, marking a sub-2,000 close for the first time in 22 months.

The fact that the government’s continued efforts for market revitalization had come to no avail triggered anxiety that the latest stock market plunge may hint at a prolonged economic downturn, instead of a passing market phenomenon.

“The recent situations are clearly different from those in the 2008 financial crisis,” Choi said in an urgent meeting earlier in the day, denying the pessimistic scenarios.

“Back then, volatility prevailed not only in the stock market but also in the foreign exchange market and the call loan market, which is not the case now.”

The drastic fluctuation shown in Seoul’s bourse was also attributable to the relatively high proportion of foreign investment here, compared to emerging economies in the Southeast Asian region, he added.

Deputy Prime Minister and Finance Minister Kim Dong-yeon also refrained from immediate policy actions.

“We are considering various options such as overseas investor relations, revision of institutional investors’ role and partial reform of the (stock trading) system,” Kim told reporters.

“There is a contingency plan but we should first keep an eye on the market situation, without moving too hastily.”

When asked about the possibility on stock exchange tax reduction, the fiscal chief called for “caution,” gesturing at reluctance against drastic responses.

The Bank of Korea also claimed that despite the recent stock depreciation, the South Korean economy still maintains its strong fundamentals.

“The foreign bond funds switched into an uptrend in mid-October, while foreign currency liquidity remains favorable,” the central bank said in a press release, following a monetary finance action plan meeting. The occasion was attended by BOK Senior Deputy Gov. Yoon Myun-shik and other director-level officials.

“Considering the price earning ratio and the price book value ratio, there are views that the (domestic) stock market has overreacted to a certain extent (to external risk factors).”

While policymakers strove to pacify market anxiety, Cheong Wa Dae once again denied the rumors on the dismissal of Finance Minister Kim and presidential chief of staff for policy Jang Ha-sung — the nation’s top two economic officers.

“We have not heard of their replacement,” said Yoon Young-chan, senior presidential secretary for press affairs, in a text message sent out to reporters.

His words came in response to local media reports that Cheong Wa Dae is seeking to replace Kim and Jang in order to bring new momentum to the nation’s lackluster economic situations.



Enjoyed this story? Share it.


The Korea Herald
About the Author: The Korea Herald is the nation’s largest English-language daily and the country’s sole member of the Asia News Network.

Eastern Briefings

All you need to know about Asia


Our Eastern Briefings Newsletter presents curated stories from 22 Asian newspapers from South, Southeast and Northeast Asia.

Sign up and stay updated with the latest news.



By providing us with your email address, you agree to our Privacy Policy and Terms of Service.

View Today's Newsletter Here

Economics

Report: US officials lied about Afghanistan

Civilian, military officials misled public for nearly two decades about status of war, Washington Post review of documents finds. For nearly two decades, senior US civilian and military officials didn’t tell the truth about the war in Afghanistan, The Washington Post reported on Monday after reviewing more than 2,000 pages of government documents. The officials made pronouncements they knew to be false and hid evidence that the war had become unwinnable, the newspaper said interviews with those officials show. John Sopko, the head of the federal agency that conducted the interviews, acknowledged to the Post that the documents show “the American people have constantly been lied to”. The newspaper said that two major claims in the documents are that US officials manipulated statistics to suggest to the American public that the war was being won and that successive


By China Daily
December 11, 2019

Economics

7 of 10 Filipinos worried by presence of Chinese workers

China has increased its presence in the archipelago. The rising presence of Chinese workers in the country worry seven out of 10 adult Filipinos, according to the latest Social Weather Stations (SWS) survey, as the government recently launched a crackdown against Philippine offshore gaming operators (Pogos) which mostly employ Chinese nationals. The noncommissioned survey, conducted from Sept. 27 to 30, found that 31 percent “worried a great deal,” while 39 percent are “somewhat worried.” Highest in Metro Manila The proportion of those who were worried about the increasing number of Chinese workers in the country was highest in Metro Manila at 75 percent, followed by the Visayas at 71 percent, Luzon outside Metro Manila (69 percent) and Mindanao (67 percent.) About half of the respondents agree that the rising number of Chinese workers is a threat to national secur


By Philippine Daily Inquirer
December 6, 2019

Economics

Pakistan to launch Digital Pakistan Vision

Imran hopes to unleash ‘potential of youth and women’ with new venture. Prime Minister Imran Khan on Thursday said that with the introduction of the ‘Digital Pakistan Vision’, the full potential of the contribution of youth and the women to the economy will be unleashed. According to a press release from the Prime Minister Office: “The Vision sets Pakistan’s digital ambition and has been designed for the government and the private sector to work towards a digitally progressive and inclusive Pakistan.” Speaking at the launch ceremony of the initiative, the prime minister regretted not having launched it at the very beginning when his government was formed. “I should have given attention to Digital Pakistan earlier. This is the most important thing for Pakistan right now, especially its youth. The whole world is moving forward digitally and we have been l


By Dawn
December 6, 2019

Economics

Thailand looks to become LNG hub

Energy Minister Sontirat Songtijirawong declared at a conference. The Energy Policy Administration Committee today (December 4) acknowledged the guidelines for turning Thailand into the regional trading hub of liquefied natural gas (LNG). The guidelines came about from a study assigned by the government-appointed energy reform committee to PTT. Energy Minister Sontirat Songtijirawong said that the move was estimated to generate Bt165 billion for Thailand’s economy between 2020 and 2030. The country is expected to start full commercial trading late next year or early in 2021. Thailand has potential to become the regional hub due to its high demand of LNG and its geographical location as the centre of countries with high LNG demand, namely China, India, Japan, Cambodia, and Vietnam. Moreover, Thailand has a supportive infrastructure to serve regional LNG tradi


By The Nation (Thailand)
December 5, 2019

Economics

S. Korean negotiator hopes for ‘win-win’ burden-sharing deal with US

Trump has accused Korea of not paying its fair share of defense costs. South Korea’s top negotiator in defense cost-sharing talks with the United States said Monday that he believes the two sides will be able to strike a “win-win” deal based on their common understanding of the bilateral alliance. Jeong Eun-bo, the top envoy to the Special Measures Agreement negotiations, made the comment upon arriving at Washington’s Dulles International Airport ahead of the fourth round of talks slated for Tuesday and Wednesday. The previous round of talks in Seoul last month was cut short, publicly displaying the rift between the allies over how to share the costs for the stationing of 28,500 American troops in South Korea.


By The Korea Herald
December 3, 2019

Economics

BioThai strikes back after delay to chemicals ban

The ban has been opposed by the United States. After delay to the ban of agricultural chemicals was announced, BioThai Foundation, a strong supporter of the ban, released an analysis report titled “36 days to cancel glyphosate ban” which identified the four factors behind the postponement. The delay was not totally unexpected. A ban was imposed on paraquat from 2005-2007 in Malaysia before multinational chemical companies teamed up with the country’s palm-rubber industry to successfully pressure the government to lift it. However, this time round, the Malaysian government was not able to resist the pressure from within the country and abroad. It will restart the ban on January 1, 2020. The Sri Lankan government announced a ban on glyphosate for all crops in 2015, it then limited use of the chemical to rubber and tea in mid-2018 after a campaign by giant che


By The Nation (Thailand)
November 29, 2019