South Korea, Asia’s fourth-largest economy, is bearing the brunt of a global financial crunch with net selling of local stocks by foreign investors at a record high this year, data showed yesterday.
The Financial Supervisory Service statistics, disclosed by Yonhap news agency, said foreign investors had sold a net 42.61 trillion won (US$29.59 billion) in stocks in South Korea this year, up until Friday.
The volume marked the highest disposal since the 1992 opening of the local stock market to foreign investors, it said, adding that this year’s foreign investors’ net selling already dwarfed the 30.56 trillion won figure of last year.
Analysts say South Korea and other emerging markets are under pressure as investors scramble to reduce overseas exposure and secure liquidity to ride out the global credit crisis.
South Korea’s stock market plunged on Friday, with the benchmark KOSPI index falling 10.6 percent to 938.75 amid massive foreign selling.
The country’s growth hit a four-year low in the third quarter.
EMERGENCY MEETING
Yonhap said South Korean President Lee Myung-bak yesterday convened an emergency meeting with his top economic policy planners and advisers to discuss stabilizing jittery financial markets.
Lee’s office would not immediately confirm the meeting.
But Yonhap said the president, who returned from the Asia Europe Meeting (ASEM) in Beijing late on Saturday, used yesterday’s meeting to address panic in the nation’s foreign currency and stock markets.
Prime Minister Han Seung-soo, Finance Minister Kang Man-soo, central bank chief Lee Seong-tae, Financial Services Commission Chairman Jun Kwang-woo and senior presidential economic aide Bahk Byung-won took part, it said.
SOLID FUNDAMENTALS
“Korea’s economic fundamentals are solid, but the financial markets and investors have reacted excessively sensitively to some external factors,” one unnamed presidential aide told Yonhap yesterday.
The aide said President Lee and his advisers discussed addressing jitters over the financial markets and follow-up measures to the agreements reached at the ASEM summit to fight the global credit crisis.
Seoul has announced sweeping measures to stabilize its stock markets.
The central bank said on Friday it provided 2 trillion won to local securities houses and asset managers through repurchase agreement deals in an attempt to ease current difficulties.
A week ago, the government announced a US$130 billion package — including a US$100 billion state guarantee on its banks’ foreign debts — aimed at allaying uncertainty.
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