The Korean stock markets are under pressure and the benchmark Korean Index, Kospi is down 2% as a result of the political uncertainty in South Korea . The martial law was lifted after a few hours of it being imposed but the Legislators are now demanding impeachment of President Yoon.. The South Korean benchmark has been extremely volatile in early trade on December and YTD, it is down 7 per cent . The uncertainty has made it the worst performing major stock market in Asia this year.
Some of the biggest losers in South Korean stock market include Samsung Electronics, which dropped almost 1% while battery-maker LG Energy Solution and automaker Hyundai Motor dropped over 2% each at 2.8% and 2.4%, respectively.
According to the analysts the after effect of the martial law may continue even after it is lifted. “Martial law itself has been lifted but this incident creates more uncertainty in the political landscape and the economy,” said Min Joo Kang, senior economist at ING.”We are concerned that these events could impact South Korea’s sovereign credit rating, although this is uncertain at this stage. However, this is a scenario that could happen.”
South Korean Govt support for market
South Korea’s finance ministry said it was prepared to deploy “unlimited” liquidity into financial markets if needed, with the Yonhap news agency saying the financial regulator was ready to deploy 10 trillion won ($7.07 billion) in a stock market stabilisation fund.
Responding to that, Charu Chanana, chief investment strategist at Saxo said, “A bit of uncertainty here given how the events played … that can fuel some rush to safety. But Korean authorities appear to be moving quickly to stabilise markets, and the impact is likely to be short-lived.”
All eyes on the US Fed
That apart, it is broadl the US cues that the Asian markets would be watching out for, On the macro side, investors are hoping for more cues to gauge the policy path the Federal Reserve will likely take next year, with much-anticipated November employment report due on Friday.
U.S. job openings increased solidly in October while layoffs dropped by the most in 1-1/2 years, data showed on Tuesday, suggesting the labour market continued to slow in an orderly fashion although another survey showed employers were hesitant to hire more workers.
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