South Korea’s Kospi heavyweights fall in volatile trading amid political chaos

South Korea’s Kospi heavyweights fall in volatile trading amid political chaos

A man holds the South Korean flag in front of the National Assembly in Seoul on Dec. 4, 2024, after President Yoon Suk Yeol declared a martial law state of emergency. South Korean President Yoon Suk Yeol declared a state of emergency on December 3, saying the move was necessary to protect the country from “communist forces” amid a debate in parliament over a draft budget.

Anthony Wallace | Afp | Getty Images

South Korean heavyweight stocks fell in a volatile trading session on Wednesday amid political unrest that saw President Yoon Suk Yeol revoking a surprise martial law decree he had imposed hours earlier.

Minutes before markets opened, Kim Byung-hwan, vice minister of economy and finance, said the regulator was ready to provide 10 trillion won ($7.07 billion) “at any time” to stabilize the stock market, local media Yonhap reported .

South Korean chipmaker Samsung Electronics saw shares fall nearly 1%, while battery maker LG Energy Solution and automaker Hyundai Motor posted bigger losses of 2.8% and 2.4%, respectively.

Chip major SK Hynix was slightly in the red in choppy trading. Internet giant Naver Corp and battery maker Samsung SDI saw shares fall more than 2.5%.

Korea Gas Corporation led the decline in the Kospi index, falling over 14%.

The benchmark Kospi index fell 2%, while the Kosdaq fell 2.4%. The South Korean won continued to depreciate by 0.05% to trade at 1,415.78 against the greenback.

Late Tuesday evening, Yoon declared a state of emergency and mobilized the army. He vowed to curb “anti-state forces” among his opponents, but reversed the decision early Wednesday morning after the National Assembly voted to repeal the presidential decree.

The sudden outbreak of political chaos has dealt a new blow to the country’s financial markets, causing capital outflows and weakening the currency, Chong Koon Park, head of economic research for Korea and Japan at Standard Chartered Bank, told CNBC in an email.

The Bank of Korea called an extraordinary board meeting following the announcement, while the financial regulator vowed to use “unlimited liquidity” to stabilize financial markets.

South Korean stocks saw significant swings in the US overnight. The iShares MSCI South Korea ETF, The index, which includes more than 90 large and medium-sized companies in South Korea, plunged as much as 7%, hitting a 52-week low, before paring losses to close down 1.6%.

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