Officials reassured investors that Seoul stands ready to tap a 100 trillion won ($75 billion) market stabilization program should financial volatility intensify, as the benchmark KOSPI plunged more than 20 percent in two sessions, rattled by soaring oil prices and geopolitical risks stemming from U.S.-Israeli strikes on Iran.
President Lee Jae Myung urged financial authorities to swiftly execute the stabilization package if needed during an emergency Cabinet meeting in Seoul.
Lee instructed ministries to draw up contingency plans and actively respond to heightened volatility in financial markets, including equities and foreign exchange.
Financial Services Commission Chairman Lee Eok-won said regulators have already convened multiple financial market monitoring meetings and reiterated that authorities are prepared to operate the stabilization program “at full readiness.”
“We have delivered preemptive stabilization messages to the market and will actively operate a market stabilization program worth 100 trillion won plus additional measures if needed,” he said. “Given the high level of uncertainty, we will maintain maximum vigilance to stabilize financial markets and minimize spillover effects on the real economy.”
Separately, the Financial Supervisory Service (FSS) held an emergency meeting with market experts to assess the recent spike in volatility and review the outlook for domestic equities.
Participants — including strategists from global investment banks, brokerage research heads and analysts from the Korea Capital Market Institute — said the latest market swings were driven largely by geopolitical risks from the Middle East crisis and short-term profit-taking after the market’s strong rally earlier this year.
Despite the sharp correction, experts broadly agreed that the underlying fundamentals of South Korea’s equity market remain intact and that the shock could prove temporary.
They noted that corporate earnings remain solid and the government’s push for shareholder-friendly policies has strengthened market conditions in recent months, suggesting that excessive declines could form meaningful support levels.
Before the Middle East conflict erupted, analysts had been steadily revising upward their 2026 KOSPI forecasts, citing improving corporate profitability and structural reforms in the capital market.
FSS Senior Deputy Governor Hwang Sun-oh said regulators are reviewing a range of contingency measures and stand ready to implement phased responses under emergency stabilization plans if necessary.
“We are closely examining various response options with the highest level of vigilance,” Hwang said.
Authorities also warned that they would take a zero-tolerance approach to misinformation and market manipulation during the period of heightened volatility.
“Criminal acts such as the distribution of fake news or price manipulation that exploit public anxiety must be thoroughly blocked,” President Lee said. “Those attempting to profit by causing confusion in the national economy will be held strictly accountable.”
The stock and currency market sharply rebounded Thursday. The KOSPI is up 10 percent and KOSDAQ 12.6 percent higher as of 11:30 a.m.. The dollar is quoted at 1,463.80, down from Wednesday close of 1,476.6.
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