Lombard Odier stated that South Korea's announcement of relaxed margin lending rules to curb forced stock market sell-offs demonstrates the South Korean authorities' high sensitivity to stock market volatility. This is related to the importance of the memory chip industry to South Korea's overall macroeconomic outlook.
Homin Lee, senior macro strategist at the bank, said, "The KOSPI at 5000 points is clearly a very sensitive level for the South Korean government, and this morning's adjustment to margin lending rules further reinforces that assessment." He added, "A sharp drop in stock prices actually increases the South Korean government's room for policy intervention."
