A man holds the South Korea flag outside the National Assembly in Seoul on December 4, 2024, after President Yoon Suk Yeol declared emergency martial law. South Korea’s President Yoon Suk Yeol on December 3 declared emergency martial law, saying the step was necessary to protect the country from “communist forces” amid parliamentary wrangling over a budget bill.
Anthony Wallace | Afp | Getty Images
South Korean heavyweight stocks fell in a volatile trading session Wednesday amid political upheaval that saw President Yoon Suk Yeol reverse a surprise martial law decree that he imposed hours earlier.
Minutes before the markets opened, Kim Byung-hwan, vice-minister of economy and finance, said the regulator was ready to deploy 10 trillion won ($7.07 billion) to stabilize the stock market “at any time,” local media Yonhap reported.
South Korean chipmaking giant Samsung Electronics saw shares drop nearly 1% while battery-maker LG Energy Solution and automaker Hyundai Motor experienced wider losses of 2.8% and 2.4%, respectively.
Chip major SK Hynix was marginally lower in choppy trading. Internet giant Naver Corp and battery manufacturer Samsung SDI saw shares sink over 2.5%.
Korea Gas Corporation led the declines in the Kospi index, falling over 14%.
The benchmark Kospi fell 2% while the Kosdaq was down 2.4%. The South Korean won depreciated further by 0.05% to trade at 1,415.78 against the greenback, recovering from a sharp fall overnight.
Late Tuesday night, Yoon declared an emergency martial law and mobilized the army, vowing to thwart “anti-state forces” among his opponents, only to reverse the decision early Wednesday morning after the National Assembly voted to overturn the president’s decree.
The sudden burst of political chaos has added a fresh blow to the country’s financial markets, driving capital outflows and weakening the currency, Chong Koon Park, head of Korea and Japan economic research at Standard Chartered Bank, told CNBC in an email.
The Bank of Korea in an extraordinary board meeting said it would increase short-term liquidity and take several measures to keep financial markets stable. Ahead of the meeting that kicked off at 9 a.m. local time, the country’s financial regulator had said it would deploy “unlimited liquidity” to stabilize the financial markets.
South Korean stocks experienced significant fluctuations in the U.S. overnight. The iShares MSCI South Korea ETF, which tracks more than 90 large and mid-sized companies in South Korea, tumbled as much as 7% to hit a 52-week low before trimming losses to close 1.6% down.