Financial market on high alert as US strikes on Iran trigger volatility
Kim Byoung-hwan, center, chairman of the Financial Services Commission, speaks during an emergency meeting to assess the stock market situation amid the escalating Middle East conflict at Government Complex Seoul, Monday. Courtesy of Financial Services Commission
Financial authorities and institutions in Korea have entered into emergency response mode after the United States' airstrikes on Iran's nuclear facilities have heightened market volatilities, officials said Monday.
The domestic stock market had maintained strong momentum amid expectations for the launch of Korea's new government on June 4, even after Israel first attacked Iran on June 13, according to the officials. But market volatility has since increased due to growing uncertainty over Iran's potential response to the U.S. strikes.
The Financial Services Commission (FSC), the country's top financial regulator, held an emergency meeting Monday to assess the state of the stock and foreign exchange markets.
The meeting, presided over by FSC Chairman Kim Byoung-hwan, was attended by Financial Supervisory Service Senior Deputy Governor Hahm Yong-il and Korea Exchange CEO Jeong Eun-bo, among others. They examined global reactions to the U.S. strikes on Iran and analyzed recent trading patterns of foreign and institutional investors in the local market.
They agreed to strengthen market monitoring through close coordination and conduct joint checks and preparations to ensure timely implementation of market stabilization measures in the event of an emergency.
"Market stability is the foundation and starting point for the advancement of Korea's capital market," Kim said. "Volatility could spike at any moment depending on developments such as a potential blockade of the Strait of Hormuz. The authorities and related institutions should stay alert and work closely together to stabilize the market, even in response to small shifts."
Acting Economy and Finance Minister Lee Hyoung-il also convened a joint emergency meeting, warning of increased volatility in global energy markets following a 2 to 3 percent rise in oil prices. He urged relevant agencies to strengthen monitoring and preparedness regarding price and supply fluctuations.
Bank of Korea Deputy Gov. Yoo Sang-dai vowed to act promptly with stabilization tools if financial or currency market volatility becomes excessive.
Demonstrators rally outside the White House in Washington D.C., Sunday, to protest the U.S. military strike on three sites in Iran. AP-Yonhap
Major financial holding companies and banks are also closely monitoring the financial markets and preparing to respond should volatility increase.
At an emergency meeting on Sunday attended by heads of key affiliates, Woori Financial Group Chairman Yim Jong-yong warned that Korea's financial and currency markets could react sensitively, with possible rises in the won-dollar exchange rate and declines in stock prices.
"We should monitor liquidity, asset quality and capital adequacy in real time, cooperate fully with government measures and provide timely support to companies facing temporary funding challenges," Yim said.
KB Financial Group said it maintains a permanent emergency response framework that enables swift action if market volatility intensifies.
Shinhan Financial Group and Hana Financial Group have also enhanced their monitoring of domestic and global developments to manage potential market fluctuations and are prepared to activate their contingency plans.
"We are implementing various strategies to guard against liquidity risks and ensure stable financial flows," a Hana Financial official said. "We plan to follow previously established scenarios for securing liquidity and supporting the real economy if necessary amid heightened uncertainty in financial markets driven by the escalating Middle East conflict."