FSS Conducts Emergency Review of Middle East Risks: "Stock Market Shock Will Be Temporary, Downside Support Is Solid"

Financial News reported that the financial authorities have launched an emergency review of the domestic stock market, as volatility increases due to geopolitical risks in the Middle East. Market experts characterized the recent decline as short-term growing pains and predicted that, given the fundamentals of the Korean market, the impact will be temporary. The Financial Supervisory Service (FSS) also announced plans to respond strictly to unfair trading practices such as price manipulation that exploit market volatility.
On the 5th, the Financial Supervisory Service held an "Emergency Meeting with Market Experts on the Middle East Situation," chaired by Hwang Sun-oh, Senior Deputy Governor for Capital Markets and Accounting. Experts from foreign investment banks, heads of research at major domestic securities firms, and officials from the Korea Capital Market Institute attended to assess the Korean stock market and discuss its outlook.
Experts at the meeting pointed to geopolitical risks stemming from the Middle East situation and increased profit-taking after previous gains as the main drivers of the recent rise in market volatility. However, they agreed that "since the rise in the domestic stock market has been driven by solid corporate earnings and the government’s shareholder-friendly policies, there is a high likelihood that a meaningful downside support level will emerge if share prices fall sharply."
They also noted that short-term volatility in macro indicators such as oil prices and exchange rates is unavoidable, but stressed that the supply-demand structure and fundamentals of the Korean stock market have improved compared with the past. Until just before the Middle East crisis, forecasts for this year’s Korea Composite Stock Price Index (KOSPI) had been steadily revised upward. Given the government’s strong commitment to revitalizing the capital market, they assessed that the current shock is unlikely to reverse the overall direction of the market.
Hwang Sun-oh said he shared the experts’ views, noting that "the rise in the domestic stock market is a revaluation process based on the fundamentals of our economy and capital market." At the same time, he emphasized, "We are responding to the recent sharp market decline with the highest level of vigilance and are reviewing response measures. If necessary, we will implement step-by-step actions without fail in accordance with our Emergency Response Plan (Contingency Plan)."
The FSS also reaffirmed its determination to respond sternly to unfair practices such as spreading false information or manipulating prices that take advantage of market anxiety. It asked the securities industry to make every effort to protect investors by providing accurate information in a timely manner so that individual investors can make informed decisions.

elikim@fnnews.com Kim Mi-hee Reporter