Political turmoil shakes South Korean markets, with heavy trading and ETF hitting a 52-week low
South Korean stocks experienced volatile trading on Tuesday as President Yoon Suk Yeol lifted an emergency martial law decree after a vote by the National Assembly overturned his order.
The political turmoil raised concerns about instability in South Korea, the world’s 13th-largest economy, CNBC reported.
The iShares MSCI South Korea ETF (EWY), which tracks over 90 large and mid-sized South Korean companies, dropped as much as 7 percent to reach a 52-week low during the session.
By the close, the ETF recovered most of its losses, ending down 1.6 percent. This marked its fifth consecutive negative day, with trading volume exceeding 35 million shares—more than ten times its 30-day average.
US-traded shares of several South Korean companies were affected but closed off session lows.
Korea Electric Power’s American depositary receipts (ADRs) fell over 2 percent, while Coupang, a prominent South Korean e-commerce firm, dropped 3.7 percent.
KT Corp., previously Korea Telecom, declined less than 1 percent. Steel manufacturer Posco saw its shares drop by more than 4 percent.
President Yoon invoked martial law late Tuesday night, the first such declaration in South Korea since 1980. The emergency order prohibited political activities and actions deemed to incite social disorder.
Within three hours, 190 out of 300 lawmakers in the National Assembly voted to overturn the decree.
Yoon accused opposition parties of sympathising with North Korea and manipulating parliament. However, he did not clarify how martial law would have affected governance or democracy in South Korea.
Following the reversal, Yoon announced the lifting of the martial law declaration.
The White House National Security Council issued a statement to NBC News, noting that the US administration is in contact with the South Korean government and monitoring the situation closely.
Despite the political turbulence, the Korea Exchange announced that stock trading would proceed as scheduled at 9 am KST on Wednesday.
Meanwhile, the South Korean won weakened, with the US dollar rising by about 0.9 percent against it on Tuesday.
The reversal of martial law and subsequent market developments underscore the challenges posed by political uncertainty in one of Asia’s largest economies.
