Lee Bok-hyun "Concerns Over Increased Market Volatility Due to DeepSeek Emergence, Needs Management"

Possibility of Increased Stock Market Volatility Due to Emergence of Low-Cost AI
Continued Concerns Over Trump's Tariff Policies Expected

Lee Bok-hyun, Governor of the Financial Supervisory Service (center), held a financial situation review meeting at the Financial Supervisory Service in Yeouido, Seoul on the 30th. Photo by Financial Supervisory Service

Lee Bok-hyun, Governor of the Financial Supervisory Service, stated that the emergence of DeepSeek could increase volatility in the stock market, and that thorough management of the financial situation will be ensured. He also expressed concerns that the high interest rates may persist longer than expected due to the U.S. Federal Reserve's decision to keep the benchmark interest rate unchanged.

On the 30th, Governor Lee held a financial situation review meeting at the Financial Supervisory Service in Yeouido, Seoul, saying, "The emergence of low-cost AI like DeepSeek could increase stock market volatility due to concerns over overvaluation of U.S. big tech stocks. Since it could also bring significant changes to the AI industry structure, we will closely monitor related trends."

He emphasized, "We will comprehensively review corporate financing conditions such as loan trends and bond issuance, and actively support to prevent difficulties caused by temporary liquidity shortages." He added, "We will encourage financial companies to accumulate sufficient reserves during the 2024 fiscal year-end closing to strengthen soundness management so that the funding supply function is not weakened despite sluggish domestic demand and real estate downturn."

He also expressed concerns about the negative impact of prolonged high U.S. interest rates and the tariff policies of the Donald Trump administration on the domestic economy. Governor Lee said, "Although the U.S. Federal Reserve kept interest rates unchanged as the market expected, it hinted at concerns about inflation recurrence and mentioned there is no need to rush rate cuts, so the current high interest rates may last longer than expected. As the Fed’s interest rate path will be determined reflecting upcoming economic indicators such as inflation and employment, as well as the impact of Trump’s policies, interest rate volatility may increase."

He continued, "Around the release of the trade practice review report on April 1, concerns about Trump’s tariff policies may be highlighted, and uncertainties both domestic and international are bound to continue expanding during the first half of the year. We will strengthen impact analysis on industries and companies sensitive to changes in Trump’s policies such as industrial subsidies and tariffs, and actively respond with relevant agencies to any support needs."