Gov’t Seek to Ease the Equity Investment Limit to Bolster Stock Market

The government has decided to ease the investment restriction that bans the top 30 conglomerates, or Chaebols, from investing to prop up the stock market. It also has decided to propel a counterpane such as an additional tax relief to boost up domestic market. Deputy Prime Minister Jin Nyum on the 17th presided over a meeting of economic ministers in the Bank Hall in Mayung Dong, Seoul and made a counter plan to work out economic emergency.

The government has decided to increase the investment limit in order to shore up share prices that might be tumble as Chaebols hit the sell button according to the restriction. The government will either increase the investment limit for the top 30 conglomerates, currently 25 percent of their net assets, or expand laws for the exceptions that are free from the restriction. The government also has decided to study ways to prop up the domestic market by providing tax incentives and imposing quota tax on oil.

Bank of Korea (BOK) promised to maintain a flexible interest rate policy based on total situation of the financial market and object-economy. Seoul Guarantee Insurance Co. also will inject 4.6 trillion in order to repay maturing corporate bonds issued by Daewoo Group affiliates.

ETF, one form of share price index funds, that is expected to boost stock market, will be on sail next year. The government also has decided to introduce employee stock ownership plans (ESOP) next year.

The BOK has decided to review a plan to lower interest rate before the committee meeting on the 11th October, if the financial market tumbles.

On the same day, 39 Investment trust companies and 38 security corporation had a meeting in the 63 building in Youui Do, Seoul, and had resolved to help stability of stock markets. Bank Association also had a meeting and has decided to support the troubled domestic market by cutting a penalty interest for delayed export bills. Hosing and Commercial Bank has decided to inject one trillion from the 18th for the stability of stock market.

yhchoi65@donga.com