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Escalating N.K. threats may sway stocks and currency markets
Investors seen to be taking wait-and-see attitude after U.N. sanction against Pyongyang
By Kim Yon-sePublished : March 8, 2013 - 19:34
Local financial policymakers said that the stock and foreign exchange markets may be swayed by the recent situation involving the intentional community’s disciplinary measures against North Korea.
As the U.N. Security Council decided to impose additional sanctions Thursday on North Korea for its Feb. 12 nuclear test, Korea’s financial regulators and economic policymakers have embarked on closer monitoring of the financial market.
Though provocative actions from the North had minimal impact on the market, there is a possibility that Pyongyang will carry out a tougher military provocation, said Financial Services Commission vice chairman Choo Kyung-ho.
Choo attributed the possibility to enhanced sanctions from the U.N.
“A provocation could bring critical volatility of the local financial market,” he said.
He added that the FSC, as the nation’s financial regulator, plans to seek effective coordination with the Ministry of Finance, the Bank of Korea and the Financial Supervisory Service.
As a step, the Finance Ministry will host a series of meetings to map out contingency plans, starting this Saturday at the Korea Federation of Banks in downtown Seoul.
The U.N. resolution bans all countries from providing public financial support for trade deals, such as granting export credits, guarantees or insurance, if the assistance could contribute to the North’s nuclear or missile programs.
On Friday, indices show that financial investors appear to be taking a wait-and-see stance toward the U.N. resolution.
The Korea Composite Stock Price Index inched up 0.08 percent, or 1.61 points, to close at 2,006.01, while the main index sank below the 2,000-mark during the trading session.
Though foreigners and retail investors net sold stocks worth 32.7 billion won ($30.2 million) and 32.9 billion won, respectively, institutional investors net purchased stocks totaling 65.7 billion won on the nation’s main bourse.
The secondary KOSDAQ index also climbed, posting a 0.33 percent increase to close at 543.09.
The Korean currency depreciated by only 3.2 won against the U.S. dollar to close at 1,090.3 won.
Dealers said the risks from North Korea have already been reflected to the foreign exchange market. Many of them predicted that the won-dollar rate will range between 1,080 won and 1,095 won in the coming weeks.
Since the Feb. 12 nuclear test, a government-led task force is pushing forward active communications with global rating agencies in a bid to prevent Korea’s credit status from being downgraded.
The task force is composed of senior officials from the Finance Ministry, the FSC, the FSS and the BOK.
“To block negative effects on the nation’s sovereign rating, we will inform credit rating firms of details on the North’s movements and the South’s countermeasures in a prompt and accurate manner,” the task force has said in a statement.
The ratings firms include the top three players ― Standard & Poor’s, Moody’s and Fitch.
Public officials said they would also engage in active exchanges of financial information with three countries ― the United States, China and Japan.
By Kim Yon-se (kys@heraldcorp.com)
As the U.N. Security Council decided to impose additional sanctions Thursday on North Korea for its Feb. 12 nuclear test, Korea’s financial regulators and economic policymakers have embarked on closer monitoring of the financial market.
Though provocative actions from the North had minimal impact on the market, there is a possibility that Pyongyang will carry out a tougher military provocation, said Financial Services Commission vice chairman Choo Kyung-ho.
Choo attributed the possibility to enhanced sanctions from the U.N.
“A provocation could bring critical volatility of the local financial market,” he said.
He added that the FSC, as the nation’s financial regulator, plans to seek effective coordination with the Ministry of Finance, the Bank of Korea and the Financial Supervisory Service.
As a step, the Finance Ministry will host a series of meetings to map out contingency plans, starting this Saturday at the Korea Federation of Banks in downtown Seoul.
The U.N. resolution bans all countries from providing public financial support for trade deals, such as granting export credits, guarantees or insurance, if the assistance could contribute to the North’s nuclear or missile programs.
On Friday, indices show that financial investors appear to be taking a wait-and-see stance toward the U.N. resolution.
The Korea Composite Stock Price Index inched up 0.08 percent, or 1.61 points, to close at 2,006.01, while the main index sank below the 2,000-mark during the trading session.
Though foreigners and retail investors net sold stocks worth 32.7 billion won ($30.2 million) and 32.9 billion won, respectively, institutional investors net purchased stocks totaling 65.7 billion won on the nation’s main bourse.
The secondary KOSDAQ index also climbed, posting a 0.33 percent increase to close at 543.09.
The Korean currency depreciated by only 3.2 won against the U.S. dollar to close at 1,090.3 won.
Dealers said the risks from North Korea have already been reflected to the foreign exchange market. Many of them predicted that the won-dollar rate will range between 1,080 won and 1,095 won in the coming weeks.
Since the Feb. 12 nuclear test, a government-led task force is pushing forward active communications with global rating agencies in a bid to prevent Korea’s credit status from being downgraded.
The task force is composed of senior officials from the Finance Ministry, the FSC, the FSS and the BOK.
“To block negative effects on the nation’s sovereign rating, we will inform credit rating firms of details on the North’s movements and the South’s countermeasures in a prompt and accurate manner,” the task force has said in a statement.
The ratings firms include the top three players ― Standard & Poor’s, Moody’s and Fitch.
Public officials said they would also engage in active exchanges of financial information with three countries ― the United States, China and Japan.
By Kim Yon-se (kys@heraldcorp.com)
