Hong Kong, China—South Korean stocks sank Wednesday while the won rebounded from earlier losses after President Yoon Suk Yeol dramatically declared martial law overnight before reversing the decision hours later.
He said the decision was made “to safeguard a liberal South Korea from the threats posed by North Korea’s communist forces and to eliminate anti-state elements plundering people’s freedom and happiness.” “Rarely does a combined sell-off in a country’s stocks, bonds and currency feel like a relief rally,” said Thomas Mathews, head of Asia-Pacific markets at Capital Economics.“Investors now ‘only’ have to worry about a period of significant political uncertainty,” he said.“As announced together with the government, it has been decided to temporarily supply sufficient liquidity until the financial and foreign exchange markets stabilise,” the Bank of Korea said.
But Michael Wan at MUFG warned of remaining uncertainty, despite the measures to recover from the initial economic hit. The losses in Seoul came on a mixed day for Asia markets, with Tokyo, Singapore, Taipei, Mumbai and Jakarta rising but Shanghai, Sydney, Wellington, Bangkok and Manila falling. Hong Kong was marginally lower.