South Korean President Yoon Suk Yeol made waves globally when he declared emergency martial law on December 3, 2024. The move was a response to what he perceived as a threat from “communist forces” during parliamentary debates over the budget bill. However, the situation quickly escalated, leading to a chaotic day of trading in South Korean stocks, with significant implications for the nation’s economy.
Stock Market Swings Amid Political Turmoil
South Korean stocks experienced extreme volatility on December 3, particularly in the U.S. market. The iShares MSCI South Korea ETF (EWY), which tracks over 90 large and mid-sized companies in South Korea, plummeted by as much as 7%, hitting a 52-week low. This sharp decline was a direct result of the uncertainty surrounding President Yoon’s emergency martial law declaration.
Despite the initial downturn, there was a slight recovery as the day progressed. The ETF managed to cut its losses to approximately 1.8% after President Yoon announced the lifting of the emergency declaration following the National Assembly’s decision to overturn it. However, this did not completely offset the negative trend, as the ETF was still on track for its fifth consecutive day of losses, with unusually high trading volume.
Impacts on U.S.-Traded Korean Companies
Several U.S.-traded Korean companies felt the effects of the political turmoil. Korea Electric Power’s American depositary receipts (ADRs) dropped by over 2%, while Coupang, a Korean e-commerce giant, saw a 3% decrease in its shares. Similarly, KT Corp. and Posco experienced declines in their stock values, underscoring the widespread repercussions of President Yoon’s martial law declaration.
International Concerns and Responses
The international community closely monitored the situation in South Korea, with the White House National Security Council stating that they were in contact with the South Korean government and monitoring developments. The declaration of martial law raised concerns about governance and democracy in the country, as this was the first instance of such a decree since 1980.
Under martial law, all political activities and behaviors inciting social disorder were prohibited, sparking debate about the implications for civil liberties and democratic norms. The Korea Exchange announced plans for an emergency meeting to address the unfolding crisis and determine whether the market would open on the following day, reflecting the widespread impact on economic stability.
The U.S. dollar also experienced fluctuations, rising by approximately 0.9% against the South Korean won on the day of the emergency declaration. This further underscored the far-reaching consequences of President Yoon’s actions on both domestic and international financial markets.
In conclusion, the events in South Korea on December 3, 2024, highlighted the delicate balance between political stability and economic uncertainty. President Yoon’s decision to declare emergency martial law sent shockwaves through the nation and the global financial community, underscoring the interconnected nature of modern economies and geopolitics.
Personal Touch: As I followed the news unfolding in South Korea, I couldn’t help but wonder about the individuals affected by these dramatic events. How would ordinary citizens navigate the uncertainty brought about by political upheaval? It’s a stark reminder of the fragility of stability and the resilience of communities in times of crisis.
