Seoul May Trigger Pension Fund Investment Plan
South Korea issued fresh assurances on Wednesday that it would take swift measures should the local financial system face a credit squeeze, but said the economy remained healthy despite global market turbulence.
The government plans to have the National Pension Fund carry out its stock investment program early if the turmoil in markets around the world continues, Vice Finance Minister Kim Seok-dong said.
The fund, which oversees 30 trillion won worth of stocks as of the end of 2007, plans to buy 9.5 trillion won ($9.96 billion) in shares this year.
"Despite the Fed's rate cut yesterday, there are still uncertainties in the global financial markets, which may have an impact on the local market," Kim told reporters after senior Bank of Korea and Financial Supervisory Commission officials met to discuss economic conditions.
On Tuesday, the U.S. Federal Reserve slashed the key interest rate by the biggest amount in more than 23 years in an emergency bid to head off a U.S. recession and halt a global rout in stocks.
That helped stock markets in Asia, including in South Korea, rebound from the previous day's plunge. The benchmark KOSPI was up 2.7 percent in the morning session Wednesday.
Kim also said the government might inject liquidity into asset management companies if their financial conditions worsen.
But South Korea's economy remains healthy, despite recent turmoil in financial markets, Kim said.
"Problems in global financial markets such as the fallout from the U.S. subprime mortgage issues have had an impact on the economy. But the overall economic conditions, such as growth, inflation and employment, are favorable," he said.