In the wake of a disruptive political crisis in South Korea, Asian markets saw a decline in trading on Wednesday. Global markets were shaken and regional uncertainty increased by President Yoon Suk Yeol’s abrupt declaration of emergency martial law, which was ultimately lifted within hours.
Markets in South Korea saw steep drops, with the Kosdaq plunging 2% and the Kospi index dropping as high as 2.3%. The largest firm in the country, Samsung Electronics, saw its shares fall 3% before bouncing back a little to close 1.12% lower.
The most severe political crisis in South Korea’s contemporary democratic history was brought on by this attempt, which also marked the country’s first declaration of martial law in more than 40 years.
Significant volatility was witnessed by the South Korean won, which first fell more than 3% to a two-year low of 1,444 per dollar before rising to 1,415 after the emergency declaration was revoked.
Tensions in the third-largest economy in Asia increased as MPs voted against the proclamation of martial law, sparking massive protests and a political impasse.
In response, the finance ministry of South Korea promised the markets that it was prepared to provide “unlimited liquidity” if necessary to achieve stability.
According to sources, the statement followed emergency meetings between Finance Minister Choi Sang-mok and Bank of Korea Governor Rhee Chang-yong overnight, as well as an unexpected meeting of the central bank board to authorize rescue measures for the local credit market.
Investor mood throughout the region was affected by the unrest in South Korea. The Topix plummeted 0.6%, and Japan’s Nikkei 225 fell 0.4%. The CSI 300 in Mainland China fell 0.5%, and the Hang Seng index in Hong Kong fell 0.25%.
But not every market experienced the same drop. While Sydney and Wellington saw losses, Singapore, Taipei, and Manila defied the trend and reported little rises.
With possible implications for market dynamics and regional stability, investors continue to exercise caution as they keep a close eye on developments in South Korea.
