S. Korea fears market ‘volatility’ after US Federal Reserve announcement

Seoul, Sep 23 (EFE).- South Korea warned Thursday of the risk of increasing volatility in the markets after the announcement on the eve of the United States Federal Reserve about its next stimulus withdrawal, along with the uncertainty caused by Chinese giant Evergrande.

Seoul is closely monitoring the situation in local financial markets at this juncture, coupled with the excess debt of South Korean households, said the country’s Deputy Finance Minister Lee Eog-weon at a Thursday ministerial meeting.

“It is possible that the volatility of the market increases, depending on the pace of the withdrawal of stimuli from the Fed,” Lee said, according to local agency Yonhap.

The senior government official also pointed out the “concern” caused in the markets by factors such as the Evergrande debt crisis “could increase abruptly due to the process of monetary policy readjustment in the large economies.”

The Federal Reserve announced Wednesday that the start of the withdrawal of monetary stimulus in the first world economy could begin at the next meeting, scheduled for Nov. 2 and Nov. 3, by reducing the monthly purchase volume of bonds.

Likewise, concerns about the financial problems of Chinese real estate giant Evergrande eased again Thursday after the company announced it would face the payment of interest on bonds listed in yuan through the Hong Kong Stock Exchange. The measure boosted the company’s shares more than 20 percent at the opening of the stock market.

The Seoul Stock Exchange closed Thursday with a 0.41 percent decline in its main indicator, the Kospi, after being closed from Monday to Wednesday for national holidays and while other international markets suffered the shocks triggered by the Evergrande crisis. EFE

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