South Korea to take action if needed on China market turmoil: Official

A man walking in front of electronic boards showing the KOSPI and the exchange rate between the US dollar and South Korean won on Dec 17, 2015.
A man walking in front of electronic boards showing the KOSPI and the exchange rate between the US dollar and South Korean won on Dec 17, 2015.PHOTO: REUTERS

SEOUL (REUTERS) - A South Korean Finance Ministry official said on Tuesday (Jan 5) that the government will take action to stabilise markets if needed, following a meeting of ministry officials the day after a steep plunge in Chinese stocks that led to a drop in the local bourse.

"There is a chance this global financial instability may be sustained and we will take action if necessary," a senior Finance Ministry official told Reuters by telephone. "We feel however, the shocks in the Chinese markets will subside over time."

The official added that if the government took action, it would likely be in the form of pre-existing measures and not new ones.

South Korea's main bourse dropped more than 2 per cent on Monday, marking its sharpest daily fall since August last year after China's major stock exchanges tanked on the first trading day of the year.

The won also hit a three-week low on Monday after foreigners dumped local shares for a 21st straight session that day.

To heighten monitoring and discuss possible measures to take against global financial volatility, the Finance Ministry and Bank of Korea held separate emergency meetings on Tuesday.

The Bank of Korea said it would closely monitor market movements at home.

Early on Tuesday, South Korean markets were steady, with the Kospi up 0.3 per cent and the won trading nearly flat against the dollar compared with Monday's onshore close.