South Korean Markets Tumble Following Brief Martial Law Declaration
South Korean financial markets experienced significant turbulence today following President Yoon Suk Yeol’s unexpected declaration of martial law, which was swiftly overturned by the country’s parliament.
The declaration, justified by alleged threats from North Korea and actions by the opposition party, sent shockwaves through the markets before a quick parliamentary response helped stabilize the situation.
Due to time zone differences, the South Korean stock market’s reaction was delayed, with trading commencing at 7 p.m. Eastern time. However, shares of South Korean companies listed on U.S. exchanges saw immediate impacts. The iShares MSCI South Korea ETF plummeted 7%, while e-commerce giant Coupang’s shares fell 10%. Other notable declines included KB Financial Group, down 6%, and POSCO Holdings, which saw an 8% drop.
The currency market also felt the effects, with the South Korean won depreciating by up to 3% against the U.S. dollar.
President Yoon, a member of the conservative People Power Party, accused the opposition of political obstruction, citing rejected budget proposals and multiple impeachment proceedings. In a televised address, Yoon emphasized threats from North Korean “communist forces” and stressed the need to protect South Korea’s constitutional order.
The martial law declaration, the first since 1980, aimed to eliminate pro-North Korean influences and imposed restrictions on political activities, rallies, and protests. However, South Korea’s parliament acted decisively, voting to overturn the order within hours of its implementation.
This swift parliamentary action led to a partial recovery in the stock market. South Korean finance officials pledged “unlimited liquidity” to further stabilize financial markets. Following the overturn, the iShares MSCI South Korea ETF reduced its losses to about 3%, while Coupang shares trimmed their decline to approximately 4%.
As markets continue to adjust to these rapid political developments, investors and analysts alike are closely monitoring the situation for any potential long-term impacts on South Korea’s economic landscape.
By
