Democratic Party, Seoul Mayor Oh trade barbs over stock market plunge

The ruling Democratic Party of Korea and Seoul Mayor Oh Se-hoon traded sharp words Sunday over a "Black Friday" stock market crash in which the Kospi briefly fell below the 5,000 mark in the wake of a "blue tsunami" in US midterm elections.

Oh called on President Lee Jae Myung to issue a public apology over the market plunge, prompting the Democratic Party to fire back that Oh was too fixated on a presidential bid to tend to his own city.

Oh fired the opening salvo in a Facebook post Sunday. "Last Friday, South Korea's stock market collapsed again," he wrote. "Within three minutes of the opening bell, the Kospi fell below 5,000 and a circuit breaker was triggered."

Oh said circuit breakers — the last-resort mechanism that halts trading when share prices fall more than 8 percent — had been triggered 11 times on the Kospi this year alone, with nine of those occurring in the five months from June, just after the local elections, through last week. "Before the election, share prices soared to an almost unbelievable degree, and since the election they have kept plunging," he said. "Can all of this really be a coincidence?"

Oh also pointed to the national pension fund's decision to raise its target allocation to domestic equities and the introduction of single-stock leveraged ETFs. "The government led the charge in stoking the illusion of rising share prices, and the public staked their savings on that illusion," he said. "Middle-aged and older Koreans poured in their retirement funds, while young people scraped together their marriage savings and home-buying money to jump into the stock market."

Oh went on to say that "the reckless arrogance of the Lee Jae Myung government — its belief that it could move markets at will — ultimately opened the gates of hell," adding that "the arrogant notion that the real estate market can be suppressed through regulation while the stock market can be pumped up by funneling in money is driving the public into misery."

Turning directly to President Lee, Oh said, "This is not the time to leisurely answer questions on a YouTube channel about why you post on social media so often or whether you are sleeping well." He urged the president to apologize in person to citizens who had trusted the government and taken on leveraged investments, and to announce concrete measures to limit further losses for retail investors.

The Democratic Party hit back hard, telling Oh to "reflect first on your low-grade view of the securities market as a gambling den."

Democratic Party spokesperson Lee Yong-woo said in a written briefing the same day, "When share prices go up it's 'electioneering,' and when they fall it's a 'gambling den'?" Lee said Oh was "exploiting public anxiety for political attacks by linking even the ups and downs of share prices to the local elections."

The spokesperson also rebuffed Oh's characterizations of the national pension fund's equity allocation increase, saying the fund management committee had deliberated and approved the decision and that it took effect from late June — after the elections — and that the leveraged product regime had been in the works since January, not just before the election.

Lee said the more serious problem was "Oh's low-grade view of capital markets," noting that Oh had described the national pension fund as "seed money," investment as "stakes" and the securities market as a "gambling den." "Is it responsible politics to frame the public's retirement assets and investments in the language of gambling, and then drag share prices into the calculus of electoral advantage?" Lee said.

Lee then warned Oh to "stop lecturing the securities market with half-baked knowledge while keeping your eyes on the presidency, and instead focus on putting Seoul's city government — which you have wrecked yourself — back in order," adding that Oh should "bear in mind that the massive Han River ferry corruption allegations mean another round as a criminal defendant may not be far off."