What's happened
South Korean President Yoon Suk Yeol declared martial law on December 3, 2024, citing threats from opposition forces. The decree, which lasted only six hours, caused significant market declines, including a 7% drop in the iShares MSCI South Korea ETF. Calls for Yoon's impeachment have intensified amid ongoing protests.
Why it matters
What the papers say
According to Huileng Tan from Business Insider UK, President Yoon's martial law declaration was a response to perceived threats from 'anti-state forces' and North Korea. The swift reversal of the decree did little to mitigate market fears, as the Kospi Index continued to decline. Tan notes that the political fallout could lead to a deeper economic slowdown.
In contrast, The Independent highlights the immediate market reactions, including a significant drop in the South Korean won and the Kospi Index. The publication emphasizes the historical context of martial law in South Korea, marking the first such declaration in over four decades. The article suggests that the financial regulator's readiness to inject liquidity into the market reflects the severity of the situation.
Business Insider UK also reported on the broader implications of Yoon's actions, linking them to the ongoing 'Korea discount' phenomenon, where South Korean stocks trade at lower valuations due to geopolitical risks. Analysts warn that this incident could exacerbate the discount, making it harder for the government to attract foreign investment.
How we got here
The political climate in South Korea has been tense, with President Yoon facing opposition over budget proposals and impeachment proceedings against officials. His declaration of martial law is the first since 1980, reflecting deepening political instability.
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