South Korea’s president ordered the activation of a $68 billion market stabilisation fund Thursday, citing the need to smooth out volatility caused by war in the Middle East.
“The escalating crisis in the Middle East is significantly worsening the global economic and security environment,” President Lee Jae Myung said.
“First, we must respond proactively to heightened volatility in financial markets, including equities and foreign exchange.”
Lee said the programme would “pre-empt instability” in capital markets.
But he stressed it would not be used to “directly prop up stock prices”.
“If structurally there is no problem, it is meant to correct temporary abnormalities when they occur, not to artificially support prices.”
The programme includes funds earmarked for government and corporate bonds.
South Korea’s benchmark Kospi index fell around 19 per cent on Tuesday and Wednesday.
But it bounced back as much as 12 per cent Thursday, leading a global rebound from the week’s turmoil.
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Until the end of last week, the index had soared around 50 per cent this year — having hit multiple records — as the rush to snap up all things linked to artificial intelligence boosted tech firms, particularly chip makers Samsung and SK hynix.
South Korea is the fourth-largest importer of crude oil in the world, according to US government figures, and relies heavily on fuel shipped from the Middle East.
AFP
