South Korea's President Lee Myung-bak called on Saturday for the government to act "promptly and aggressively" to minimise the impact of global financial turmoil on the local economy. Following a meeting with heads of economic ministries and the central bank, Lee ordered measures to protect small- and medium-sized companies exposed to the market crisis.
"Although domestic and global markets are showing signs of stabilisation, we need to respond promptly and aggressively to prevent an unexpected event from hurting the local economy," Lee was quoted as saying in a statement. "Small- and medium-sized companies may fail due to a temporary liquidity squeeze. The authorities must come up with thorough measures to monitor individual companies' conditions on a daily basis," Lee said.
His comments came after Bank of Korea Governor Lee Seong-tae on Friday pledged to react pre-emptively and aggressively on signs of market instability. Financial markets in South Korea, Asia's fourth-largest economy, have ridden a roller-coaster in line with Wall Street, hit by high-profile bankruptcies and emergency bail-outs in the US financial industry.
Many small companies have suffered losses from a sharp fall in the won currency against the dollar, as well as the volatile markets. Separately, Lee said the government might have missed a timing to make a decision on the sale of Korea Exchange Bank (KEB), referring to the HSBC's announcement to walk away from the deal.
HSBC, Europe's largest bank by market value, said on Friday it dropped a $6.3 billion offer to buy 51 percent of KEB from US private equity house Lone Star, blaming the financial market turmoil that has slashed the value of banks and other assets. HSBC had agreed a year ago to buy KEB, but the sale stalled in legal disputes and regulatory delays.
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