Top regulator urges institutions to help soothe markets

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SEOUL, Aug. 9 (Yonhap) -- South Korea's top financial regulator called on heads of local securities firms and asset managers Tuesday to join the government's efforts to soothe markets, saying institutional investors' role is important.
The remarks by Kim Seok-dong, chairman of the Financial Services Commission (FSC), came as he held a meeting earlier in the day with eight chief executives from local brokerages and asset management firms in a bid to ease market turmoil sparked by last week's U.S. credit downgrade.
"Overall, the Korean economy remained sound given the country's foreign reserves, external debt structures and health of financial firms ... Retail investors massively sold stocks on Monday. Short-term shocks were felt, but fundamentally, Korea's financial system is sound," Kim said.
The chairman requested that the CEOs make efforts to beef up the financial markets as institutional investors in the situation that the Korean financial markets are highly influenced by foreign capital movements.
"The financial watchdog plans to closely monitor foreign currency liquidity situations at local financial firms and take appropriate actions with proper timing," he added.
The meeting came as the Seoul financial markets were jolted by investors' panic selling by the credit rating downgrade for the world's largest economy by Standard & Poor's (S&P).
The benchmark Korea Composite Stock Price Index (KOSPI) has fallen more than 15 percent since Aug. 2, gripped by fears about a double-dip recession.
The KOSPI crashed as much as 9.88 percent at one point in late morning trade, falling below the 1,700-point level at one point. It tumbled 3.82 percent to a 10-month low of 1,869.45 on Monday on panic selling.
The local currency has depreciated to the dollar for the sixth straight session as global recovery woes revived investors' appetite for safe assets. The Korean won has lost about 3 percent to the greenback since Aug. 2.
Global credit rating agency S&P cut the U.S. credit rating by one notch to "AA+" from a top-tier "AAA" on Friday, sending global financial markets into a tailspin.
sooyeon@yna.co.kr