South Korea's Financial Services Commission (FSC) announced Thursday it will extend all loans and guarantees for small and mid-sized enterprises affected by geopolitical uncertainties in the Middle East for one year.
FSC Chairman Lee Eok-won convened an emergency financial market assessment meeting at the Government Complex Seoul with officials from the Financial Supervisory Service and financial experts.
Participants attributed the heightened market volatility, including the KOSPI's 12.06% plunge that day, to escalating geopolitical risks in the Middle East and profit-taking demand. However, they agreed that the possibility of a sustained downturn remains limited, citing continued upward momentum from corporate earnings and expectations for capital market vitalization policies.
An FSC official stated, "As authorities are closely monitoring the market and are equipped with policy response capabilities, it is important for market participants to make rational judgments based on confidence in our economy and financial markets rather than harboring excessive anxiety."
Chairman Lee emphasized, "Stabilizing financial markets and minimizing the impact on the real economy are paramount." He directed officials to "actively deploy the 100 trillion won-plus market stabilization program currently in operation should excessive market volatility occur." He also reaffirmed a zero-tolerance policy against market manipulation and fake news.
Korea Development Bank, Industrial Bank of Korea, and Korea Credit Guarantee Fund will extend full maturity on existing loans and guarantees for affected companies for one year to ease liquidity constraints. The three institutions had announced a 13.3 trillion won financial support program the previous day. An FSC official added, "Immunity provisions exempting financial support staff from sanctions in the absence of willful misconduct or gross negligence will also be applied."
The FSC plans to operate its financial market response team around the clock until market conditions stabilize.