Stock Market Stabilization Plan Under Way
By Yoon Ja-young
Staff Reporter
The government is considering a package of steps to stabilize the stock market, said Rhee Chang-yong, vice chairman of the Financial Services Commission (FSC), Tuesday. The measures are expected to include cutting tax, and easing regulation on insurance firms buying of stocks or setting up funds.
``The local stock market is doing okay despite the plunge on overseas stock markets. Incentives from the government will work,'' Rhee said after a meeting with analysts, aimed at easing concerns on Seoul's financial market.
He refrained from revealing concrete details, but there has been expectation that the government might cut taxes on stock transactions or fund investments. Allowing listed firms to buy back more of their own shares or setting up a fund to stabilize the stock market could also be considered. These measure come after regulators allowed tax benefits for fund investors and banned short selling of stocks.
Rhee forecast the global financial market to stabilize after Europe comes up with plans to cope with the crisis.
He said investors need not overreact as the market is expected to recover quickly as the current account turns to a surplus in the fourth quarter and the global financial market stabilizes.
Rhee told analysts that the local financial market is not in a bad shape. ``The global financial market is experiencing difficulties, and a lot of people are mentioning a currency crisis. However, our market is different from the United States or Europe.'' He said banks have enough liquidity to meet their requirements for at least the next three months without supply from outside.
Deputy Strategy and Finance Minister Shin Je-yoon also said that Korea has enough reserves. He said the foreign debt now is different from that of a decade ago, as much of it is short-term debt based on future income, such as forward contracts.
He added that the $239.7 billion in foreign exchange reserves were safe assets, which could immediately be converted into cash.