Market Turmoil with President's Warning of 'Upbit' 50 Trillion Increase in Stock and Bond Funds

On the morning of the 4th, the stock prices on Jeju Island fluctuated sharply. Despite the unprecedented non-market situation in 45 years, the stock market was volatile until dawn. Although the market opened, the decline was not as large as expected. The KOSPI index, which fell by 2% at one point, reduced its decline to around 1% by mid-morning. However, as the stock market and exchange rates continued to fluctuate, criticism emerged that President Yoon Seok-yeol had declared a warning to the market. The government hinted that it could mobilize a 50 trillion won scale of the Stock Market Stabilization Fund and Bond Market Stabilization Fund.

Kim Byung-hwan, chairman of the Financial Services Commission, held a 'Financial Situation Inspection Meeting' with the heads of financial supervisory authorities, financial public institutions, and financial associations on this day, stating, "We will prepare so that the 10 trillion won scale of the Stock Market Stabilization Fund (Stock Stabilization Fund) can be mobilized at any time." He also emphasized, "In the bond market and capital market, we will maximize the mobilization of the 40 trillion won scale of the Bond Market Stabilization Fund (Bond Stabilization Fund) and corporate bond and commercial paper (CP) purchase programs to maintain stability."

He continued, "The financial authorities will work with policy financial institutions, financial public institutions, and financial associations to prevent the spread of instability in the financial market and will take all possible measures to ensure that the financial market operates normally and stably," adding, "We will respond to risks such as margin calls (additional collateral requirements) following exchange rate increases by providing foreign currency liquidity through securities finance."

Chairman Kim also stated, "Securities-related institutions such as brokerage firms should focus on efforts to stabilize investor sentiment and prevent market disturbances such as price manipulation, public disclosure violations, and tax evasion."

Earlier, the government announced at the 'F4 (Finance 4: Ministry of Strategy and Finance, Financial Services Commission, Financial Supervisory Service, Bank of Korea) meeting' held immediately after the non-market warning declaration that "we will fully support all possible financial and foreign exchange market stabilization measures, including unlimited liquidity supply."

Kim Ik-hwan, Reporter lovepen@hankyung.com