Korea to unveil new funding of $21 bn or more to calm financial markets

2020.03.23 14:21:07 | 2020.03.23 15:42:41

[Photo by Yonhap]이미지 확대

[Photo by Yonhap]

South Korea plans to unleash another stabilization measure Tuesday, aiming to pump at least 27 trillion won ($21 billion) into financial markets to ease market volatility stemming from the coronavirus pandemic.

The Financial Services Commission (FSC) said the new measures would be announced Tuesday at the second emergency economic council meeting to be chaired by the president.

Tuesday’s meeting is expected to include funding to ease the short-term liquidity crunch for companies.

The news slightly eased the stock markets. Losses of more than 6 percent in the main Kospi and secondary Kosdaq eased to around 5 percent in Monday closing.

Authorities will package a stock market stabilization fund in the scale of 10 trillion won or more.

In 1990, private financial institutions had backed a 4-trillion-won stock market stabilization fund. During the 2008 financial crisis, local stock exchange institutions had teamed up to inject 515 billion won into markets.

Another 10-trillion-won fund will go into the bond market. Primary collateralized bond obligations (P-CBOs) have been set at 6.7 trillion won. A collateralized bond obligation is a type of security backed by corporate loans with a low credit rating that allows companies to finance money at low costs.

FSC Chairman Eun Sung-soo plans to meet with chief executives of major lenders to finalize the plan as their support would be critical in the funding of the program.

By Pulse

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