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Hong Kong, China — South Korean stocks sank more than two percent Wednesday while the won rebounded from earlier losses after President Yoon Suk Yeol dramatically declared martial law overnight before reversing the decision hours later.
The shock announcement sent shivers through the trading floor in Seoul and fuelled a political crisis in Asia’s third-biggest economy, with the already unpopular Yoon facing a possible impeachment.
Investors are now keeping a close eye on developments in the country, with analysts pointing out that the upheaval comes as authorities steeled for the second presidency of Donald Trump, who has vowed to reignite his hardball trade policy.
The Kospi index shed as much as 2.3 percent at the open as traders fretted over the impact of the events overnight, when Yoon declared South Korea’s first martial law in more than four decades, catching its global allies off guard.
He said the decision was made “to safeguard a liberal South Korea from the threats posed by North Korea’s communist forces and to eliminate anti-state elements plundering people’s freedom and happiness”.
However, he backed down hours later when lawmakers voted to oppose the declaration, while thousands of protesters took to the streets and the nation’s largest umbrella labour union called an “indefinite general strike” until Yoon resigned.
