Vice Minister Choo Gyeong-ho chaired the 3rd Macroeconomy and Finance Meeting on April 12. The meeting was held to monitor the effects of North Korean risks on financial markets and discuss response measures.
Monitoring Foreign and Domestic Financial Markets
The effect of the changing North Korean situation on financial markets has grown in April, but recently these effects appear to be easing somewhat. The stock market dropped throughout last week, and this week the stock market has repeatedly fluctuated, compounded by North Korean risks, concerns regarding the weak yen, and an upsurge in overseas stock markets.
Foreign investors, who had sold off their holdings throughout last week, once again turned to net purchases of stock investments in the middle of this week.
*Net purchase of stocks by foreigners (trillions of won): -1.9 (April 1-9) - 0.3 (April 10-12)
The won-dollar and won-yen exchange rates fell due to dollar sales by offshore and export businesses.
North Korean provocations are expected to have a limited effect as financial markets more or less stabilized this week. However, as the threat from North Korea becomes more intense, the government will strengthen its monitoring in order to adequately prepare against North Korean risks to the market, and the government will also boost efforts to stabilize foreign investor sentiment.
The Macroeconomy and Finance Meeting will be held every week until tensions arising from North Korean risks are eased, and will concentrate on monitoring the economic and financial market situations. Last week, the government sent an explanation of North Korea-related concerns and worries to the credit agencies, and today sent out a similar explanatory message regarding North Korea and financial market trends to major foreign and domestic investors. The government held its first conference call for major overseas investors on April 11, and will continue to make conference calls in order to limit the spread of unnecessary worries.
As was discussed last week at the 2nd Macroeconomy and Finance Meeting, in the case that financial market anxieties worsen or North Korean risks grow, related ministries will jointly monitorthe situation 24/7, and re-analyze contingency plans. If necessary, active and speedy market stabilization measures will be deployed. Moreover, the government, through consultations with related ministries, is preparing support measures for businesses that are suffering financial difficulties due to the temporary suspension of operations at the Gaeseong Industrial Complex.