Expect volatility and negative price action across South Korean assets and interlinked markets, wrote Rory Green, at GlobalData.TS Lombard.
South Korean President Yoon Suk Yeol’s short-lived martial law announcement is undoing one of his top goals: boosting the value of stocks.
On Wednesday, South Korea’s Kospi Index fell as much as 2.2% and closed 1.4% lower. The Kospi is already the worst-performing major Asian stock index this year, trading about 7% lower this year to date.
Shares of Samsung Electronics, South Korea’s largest company, tumbled as much as 3% before paring losses.
Late on Tuesday, Yoon — who has been under political pressure —declared martial law in a shock address, citing threats from “anti-state forces” and a need to counter North Korea.
The stunning announcement triggered market losses in US-listed South Korean stocks and sent the country’s currency to a two-year low.
Hours later, Yoon reversed his decision on martial law amid protests in Seoul, but the immediate damage has been done.
The latest political turmoil in South Korea isn’t going to help — particularly since South Korean stocks have already been plagued by the so-called “Korea discount” for decades.
