South Korea Market Plunges on Martial Law Declaration

Following President Yoon Suk Yeol’s declaration of martial rule and the use of emergency powers, which sparked concerns about instability in the 13th largest economy in the world, South Korean equities fell in the United States on Tuesday.

At a 52-week low, the iShares MSCI South Korea ETF, which covers over 90 major and mid-sized South Korean firms, fell as much as 7%. After members in the South Korean National Assembly voted early Wednesday morning in Seoul to rescind Yoon’s martial law proclamation, the ETF reduced losses to roughly 2.6%.

Due to abnormally high trading volume, the ETF is headed for its fifth consecutive negative day. More than eight times its 30-day average volume, or about 27 million shares, had exchanged hands so far on Tuesday.

Korean e-commerce behemoth Coupang saw a 6% decline, while Korea Electric Power’s American Depositary Receipts (ADRs) fell 5%. Shares of KT Corporation, formerly known as Korea Telecom, dropped 3%. South Korean steel producer Posco saw a more than 6% drop.

After Yoon imposed martial law late Tuesday night, 190 of the 300 members of the National Assembly convened to lift the interim martial law within three hours.

The president accused opposition groups of dominating parliament and harboring North Korean sympathies. Yoon did not elaborate on the potential effects of martial law, which is a temporary control imposed by military forces during an emergency, on the nation’s democracy and government.

The White House National Security Council told NBC News that “the Administration is in contact with the ROK government and is monitoring the situation closely.”

All political activities and actions that “incite social disorder” are forbidden under the declaration of martial law. A South Korean government has declared martial law for the first time since 1980.

According to local media, the Korea Exchange declared that it would convene an emergency meeting “to prepare response measures” before determining whether the market would open on Wednesday. Notably, the U.S. dollar rose 1.9% vs the South Korean won on Tuesday.