Seoul stocks sink amid South Korea drama as Asian markets mixed

South Korean stocks plummet as President Yoon declares martial law, causing political turmoil and economic uncertainty in Asia.

South Korean stocks sank Wednesday (December 4, 2024) 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 Opposition party saying it had submitted a motion to impeach Yoon.

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 United States Presidency of Donald Trump who has vowed to reignite his hardball trade policy.

The Kospi index ended down more than one percent, having shed as much as 2.3% at the open, as traders fretted over the impact of Mr. Yoon declaring South Korea’s first martial law in more than four decades.

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 Mr. Yoon resigned.

The won tumbled more than three percent to a two-year low of 1,444 per dollar after the declaration, then bounced back to around 1,410 following the U-turn.