South Korean stocks and the country’s currency fell on Wednesday morning after a tense night during which President Yoon Suk Yeol declared and then lifted a martial-law declaration.
The benchmark Kospi index fell about 2 percent in early trading in Seoul. Shares of some of South Korea’s biggest companies were down, with Samsung Electronics losing more than 1 percent and LG Energy Solution and Hyundai Motor shedding more than 2 percent.
After a steep drop overnight, the South Korean won found its footing somewhat. On Wednesday morning it was trading down by about 1 percent against the dollar since the initial declaration of martial law late Tuesday night.
Just before midnight on Tuesday and early in the morning on Wednesday, South Korea’s finance minister, Choi Sang-mok, convened meetings in Seoul with officials from the central bank and key financial regulators. They pledged to meet daily to “establish a constant risk management system” and provide “unlimited liquidity support” until the stock, bond and currency markets stabilized.
Mr. Choi said on Wednesday that the government would focus on shielding the economy, and that officials would “closely communicate” with the authorities of other countries with major economies. “In any given situation, the government will do its best to address economic concerns and to minimize disruptions in entrepreneurial and daily activities,” he said.
The Bank of Korea’s monetary policy board said it would hold an emergency meeting on Wednesday. The central bank unexpectedly cut interest rates last week, citing “heightened uncertainties surrounding growth and inflation, driven by the new U.S. administration’s policies.”
As opposition lawmakers demanded that President Yoon step down, analysts and investors were trying to gauge how long South Korea’s outbreak of political turmoil would persist.
Market, consumer and business sentiment will likely “take a significant hit” for some time, as it did in the period around South Korea’s last presidential impeachment in 2017, said Min Joo Kang, a senior economist at ING.
South Korea’s credit rating could also be affected, though that is uncertain at this stage, Ms. Kang said in a note.
“South Korea’s democratic institutions and culture have withstood the stress test,” Krishna Guha, vice chairman of Evercore ISI, wrote in a note. He expected “minimal” disruption to business and supply chains, “but it is extraordinary and troubling that it happened at all,” he added.
Elsewhere in the Asia Pacific region, markets fell slightly but remained relatively calm. Benchmark indexes in Japan, Australia and Hong Kong all fell by less than 1 percent on Wednesday morning.
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