SEJONG, Jan. 5 (Korea Bizwire) -South Korea downplayed the impact of China’s stock market crash on its domestic financial market on Tuesday, saying the market will regain stability again.
Chinese stock tumbled nearly 7 percent Monday on the year’s first trading session due to concerns over its manufacturing sector, rattling South Korean and other financial markets.
The benchmark Korea Composite Stock Price Index (KOSPI) plunged more than 2 percent to a four-month low on Monday, with the South Korean currency sinking to the lowest level against the U.S. dollar in more than three months.
“The impact of Chinese turmoil on the South Korean financial market will be limited,” said Choi Hee-nam, deputy finance minister for international affairs, after an emergency meeting of financial officials. “It will soon stabilize again.”
Recovering from Monday’s plunge, the KOSPI opened slightly higher Tuesday, with the local currency losing slight ground against the greenback.
He noted that China’s latest factory activity data led the shock in the market, along with escalating tensions between Saudi Arabia and Iran over religious issues. “But China’s other economic data is not so disappointing,” he added.
Choi said the ministry will keep closer tabs on the global and local financial markets to prevent any fallout from Chinese risks.
China’s economic slowdown has spawned concerns that it could make a dent in the economy of South Korea, which relies heavily on exports to the world’s second-largest economy for its growth. China is South Korea’s largest trading partner as two-way trade stood at about US$290 billion in 2014.