South Korea's president ordered the activation of a US$68 billion market stabilisation fund on 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 US$68 billion 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 had in the past been used to directly inject cash into the benchmark Kospi index, which saw losses amount to around 19 percent on Tuesday and Wednesday.

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

Until Friday, the index had soared around 50 percent this year – having hit multiple records – as the rush to snap up all things linked to artificial intelligence boosted tech firms, particularly chipmakers 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. (AFP)



Edited by Thomas McAlinden