South Korea activates Sh9 trillion market stability fund over Mideast crisis

South Korean President Lee Jae Myung delivers a speech at the Philippines-Korea Business Forum in Pasay, Metro Manila on March 4, 2026. [AFP]

South Korea's president ordered the activation of a Sh9 trillion market stabilisation fund Thursday, citing the need to smooth out volatility caused by war in the Middle East.

"The escalating crisis in the Middle East is significantly worsening the global economic and security environment," President Lee Jae Myung said.

"First, we must respond proactively to heightened volatility in financial markets, including equities and foreign exchange."

Lee said the Sh9 trillion programme would "pre-empt instability" in capital markets.

The fund includes money earmarked for bond and stock markets as well as real estate financing.

While it was not clear how it would be deployed, similar measures have in the past been used to directly inject cash into the benchmark Kospi index, which fell around 19 percent on Tuesday and Wednesday.

But it bounced back as much as 12 per cent Thursday, leading a global rebound from the week's turmoil.

Until Friday, the index had soared around 50 per cent this year -- having hit multiple records -- as the rush to snap up all things linked to artificial intelligence boosted tech firms, particularly chip makers Samsung and SK hynix.

South Korea is the fourth-largest importer of crude oil in the world, according to US government figures, and relies heavily on fuel shipped from the Middle East.