In brief
The declaration's impact prompts government reassurances, but uncertainty looms over the economy.
Dec. 3, 2024 - In South Korea, market instability arose following President Yoon Suk Yeol's declaration and subsequent lifting of martial law. Early Wednesday, the Kospi index dropped approximately 2 percent, with major corporations such as Samsung Electronics and Hyundai Motor witnessing notable losses. Following the martial law announcement late Tuesday, the South Korean won dipped about 1 percent against the dollar.To address this volatility, Finance Minister Choi Sang-mok organized urgent meetings with central bank and regulatory officials, who committed to providing “unlimited liquidity support” until market conditions improve. Choi emphasized the government's focus on safeguarding the economy amidst political turmoil and enhancing communication with other global economic powers.In response to the heightened instability, the Bank of Korea is holding an emergency meeting regarding monetary policy adjustments. Market analysts fear prolonged negative effects on business and consumer sentiments akin to those experienced during South Korea's 2017 presidential impeachment crisis. Min Joo Kang, a senior economist at ING, noted that South Korea’s credit rating might be influenced by this situation, although the extent remains uncertain.While South Korea grapples with this political upheaval, other Asia-Pacific markets showed minor declines. Analysts remain hopeful that South Korea’s robust democratic framework will mitigate disruption risks, although the extraordinary situation raises serious concerns.
