S. Korea to focus on financial stability amid concerns over asset market boom

South Korea’s vice finance minister vowed Thursday to strengthen financial stability this year amid concerns that idle money is excessively flowing into asset markets.

Vice Finance Minister Kim Yong-beom made the remarks amid mounting worries that only asset markets, such as property and stock markets, are booming even as economic slumps caused by the COVID-19 pandemic have continued.

“Authorities are facing the task of closely managing liquidity that has sharply increased in the process of crisis responses so as not to hurt financial stability and exploring ways for the soft-landing when unwinding measures to tackle the pandemic,” Kim said at a financial meeting.

Concerns are growing that the gap between the real economy and financial markets is deepening, prompting key economic policymakers to issue a warning in the new year.

South Korea’s key stock index broke above the 3,000 mark for the first time Wednesday on the back of retail investors’ strong buying. The KOSPI jumped 31 percent last year alone.

The country’s housing prices also did not show a letup despite the government’s measures to cool down the real estate market, as low interest rates and anticipation for further price gains prompted more people to rush into buying homes.

In a message for the new year, South Korea’s finance minister and the chief of the central bank stressed the need for prudent risk management amid mounting concerns about overheating in asset markets.

“Should the financial markets continue sustainable advances, the success of containing the new coronavirus outbreak and a recovery of the real economy should be backed up,” Kim said.