South Korean stocks experienced a significant decline after President Yoon Suk Yeol announced the implementation of martial law on Tuesday evening. President Yoon justified his decision by citing threats from North Korean forces and actions taken by the opposition party. The declaration had a negative impact on the country's stock market, with various South Korea-based companies seeing a decline in their share prices.
The iShares MSCI South Korea ETF dropped by 7% following the announcement, while shares of companies such as Coupang, KB Financial Group, and POSCO Holdings also experienced significant declines. The South Korean won also saw a decrease in value relative to the US dollar.
President Yoon, a member of the conservative People Power Party, accused the opposition party of obstructing governmental functions and creating instability in the country. He emphasized the need to protect South Korea from external threats, particularly from North Korean forces.
In response to the martial law declaration, South Korea's parliament voted to overturn the order, leading to a stabilization of the financial markets. However, military officials stated that the law would remain in effect until President Yoon officially lifted it. President Yoon later announced that he would lift the martial law decree after holding a meeting with his cabinet.
Following the parliament's decision to overturn the martial law order, South Korean stocks began to recover, and the government pledged to provide unlimited liquidity to stabilize the financial markets. The iShares MSCI South Korea ETF and shares of companies like Coupang saw a partial rebound after the parliament's vote.