SOUTH Korean shares declined sharply at the open on Wednesday (Dec 4), tumbling nearly 2 per cent after the country’s President Yoon Suk Yeol declared martial law overnight.
Yoon then lifted the decree within hours, but calls were growing for his impeachment after his shock decision to impose martial law.
The benchmark Kospi opened sharply lower, down 1.9 per cent as at 9.06 am (8.06 am Singapore time). It last slid 1.8 per cent by 11.13 am.
Major Korean stocks were in the red. Samsung was down more than 1 per cent, Hyundai Motor fell more than 2 per cent, and Lotte tumbled 2.6 per cent.
The won, which had weakened against the US dollar overnight by as much as 2.9 per cent, pared those losses. Swinging between declines and gains in early Korean trade, it last rose as much as 1.6 per cent to 1,406.35 per dollar.
South Korea’s finance ministry said that it is ready to deploy “unlimited” liquidity into financial markets if needed after the martial law declaration pushed the won to multi-year lows.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
The announcement came after Finance Minister Choi Sang-mok and Bank of Korea (BOK) governor Rhee Chang-yong held emergency meetings overnight, and ahead of the BOK’s extraordinary meeting session abruptly scheduled for 9 am local time on Wednesday.
Other Asia-Pacific markets were mostly in negative territory in the morning. Japan’s Nikkei 225 was down 0.2 per cent, while Hong Kong’s Hang Seng index slid 0.6 per cent. Australia’s ASX 200 declined 0.6 per cent.
Korean American depositary receipts (ADRs) – Korean stocks traded in the United States – sold off overnight, declining around 6 per cent, Morningstar noted.
“We don’t expect the sell-off in the ADRs to continue. However, we may see a subdued but still negative impact to share price action in the Korean market when it opens for trade,” Morningstar said.
“This event highlights that the political risks and the leadership issues in Korea remain,” it added.
Morningstar’s fair-value estimates for South Korean stocks under its coverage, however, remained unchanged as it sees the martial law development to be a short-term event, and noted that share price weakness is an opportunity for investors to buy selectively.
