Seoul: The head of South Korea's Financial Services Commission (FSC) on Wednesday called for proper risk management amid a growing number of investors taking out loans to invest in stocks, while noting that the recent increase in credit loans does not pose a major threat to overall financial stability. FSC Chairman Lee Eok-won made the remarks during a meeting with reporters, as credit loans have risen sharply in tandem with a bull run in the domestic stock market.

According to Yonhap News Agency, "Household loans increased last month, but new mortgage loans have continued to decline in the second half of this year. Though credit loans rose by about 1 trillion won, it does not appear to have driven overall household debt growth or threaten financial soundness," Lee said. "Risk management by investors themselves is important. We will continue to monitor the trend closely," he added.

South Korean stocks have been among the world's best performers this year, supported by government-led market reform measures and optimism over the artificial intelligence (AI) boom. Speaking of the real estate market, Lee said the latest set of regulations has only recently taken effect, and the government will closely monitor their impact on the market, household debt and lending trends.

Under the new measures announced on Oct. 15 to cool an overheated housing market and curb surging household debt, the government designated 21 additional districts in Seoul as speculative zones, bringing all 25 districts in the capital under stricter regulations. The measures also tightened lending rules, lowering the cap on mortgage loans to as little as 200 million won (US$136,000) from 600 million won set in June.

Regarding President Lee Jae Myung's suggestion of potential tax benefits for long-term investors, the FSC chief underscored the importance of expanding long-term investment, adding that the commission would work with related government ministries to devise related measures possibly for next year.