By Na Jeong-ju
Staff Reporter
President Lee Myung-bak called Thursday for financial market participants to react calmly to North Korea's nuclear provocation, saying the market is not as vulnerable the threats as it was in the past.
``Regulators should strengthen monitoring of the market and take preemptive measures so that firms don't need to be too nervous about the North's military threats,'' Lee said. ``The biggest downside risk for the domestic economy is the global slowdown, rather than the North Korea factor.''
Lee made the remarks during a meeting with top economic policymakers at Cheong Wa Dae.
In a policy report to President Lee, Financial Services Commission Chairman Chin Dong-soo said there was a considerable shock in the financial market immediately after the North conducted a nuclear test on Monday, but it is stabilizing fast.
``The North Korean nuclear issue has raised vulnerability here, but investor sentiment still remains strong,'' Chin said. ``Overseas investors see the North's nuclear and missile threats as having a limited impact on the stock and bond markets. They believe tensions on the Korean Peninsula will not have an immediate impact on the country's sovereign ratings and rating outlook.''
The meeting came after global rating agencies, such as Standard & Poor's and Moody's Investors Service, said they will keep their stable outlook on South Korea's sovereign credit rating despite the North's nuclear test and threats.
``The test is an indication of its dissatisfaction with the results of its negotiations with South Korea, the U.S. and others. Volatility on this front is to be expected and we do consider it a factor that is important to our assessment of the South Korean government's credit ratings,'' said Kim Eng Tan, an analyst at Standard & Poor's.
``However, unless the situation progresses to an extent that we believe has significantly raised the security risks on the peninsula, we do not consider the event to require us to re-evaluate our sovereign credit rating on Korea,'' he added.