The government said Tuesday that the Chinese stock market plunge on Monday will have a limited impact on the South Korean financial market.
 
The reassuring remark came from Deputy Finance Minister of International Affairs Choi Hee-nam during a senior-level meeting of the Ministry of Strategy and Finance, which was held in response to the massive fall of the Chinese stock market on Monday.
 
Choi said that the Shanghai Composite Index freefall was not so much a reflection of the fundamentals of the Chinese economy as a technical issue, adding investors overreacted to the circuit-breaker system introduced to the Chinese market for the first time in December.
 
Choi noted although the manufacturing index in China was in bad shape, other indices of the Chinese economy were not bad.
 
The deputy minister said the intensifying conflict between oil-rich nations Saudi Arabia and Iran has applied more selling pressure on the Chinese stock market by deepening risk-off sentiment among investors.
 
He assured the South Korean financial market will be stabilized soon, vowing that the local authorities will continue to monitor the situation.
 
On Monday, China’s Shanghai Composite Index plunged almost seven percent and triggered a circuit breaker, causing ripple effects across the world.
 
The benchmark Korea Composite Stock Price Index (KOSPI) fell two-point-two percent on Monday, while Japan’s Nikkei 225 dropped three-point-one percent. The Dow Jones Industrial Average in New York slid one-point-six percent.