- South Korea stocks plunged after President Yoon declared martial law Tuesday evening.
- Yoon cited threats from North Korean forces and actions by the opposition party as reasons for the declaration.
- South Korea’s parliament overturned martial law by popular vote, which helped stabilize markets.
South Korea stocks plunged on Tuesday after its president proclaimed martial law was in effect.
South Korea’s stock market does not open until 7 p.m. Eastern time, but shares of South Korea-based companies that trade on the Nasdaq and New York Stock Exchange declined.
The iShares MSCI South Korea ETF plunged 7% following President Yeol’s declaration, while shares of the e-commerce company Coupang plunged 10%. KB Financial Group saw its shares decline 6%, while steel company POSCO Holdings declined 8%.
The South Korean won plunged as much as 3% relative to the US dollar.
South Korean President Yoon Suk Yeol, a member of the country’s conservative People Power Party who took office in 2022, accused the opposition party of holding South Korea hostage by rejecting a budget proposal and initiating 22 impeachment proceedings against government officials.
President Yoon said in a televised address Tuesday night that the country was vulnerable to North Korean "communist forces."
"Honorable citizens, as President, I appeal to you with a feeling of spitting blood," President Yoon said. "The martial law is aimed at eradicating pro-North Korean forces and to protect the constitutional order of freedom."
"I declare martial law to protect the free Republic of Korea from the threat of North Korean communist forces, to eradicate the despicable pro-North Korean anti-state forces that are plundering the freedom and happiness of our people, and to protect the free constitutional order," Yoon said, according to Reuters.
It is the first time martial law was declared in South Korea since 1980, when the country was under military rule.
The order said that any political activities by South Korea's parliament were barred, and also restricted political rallies and protests.
The martial-law order was challenged by South Korea's lawmakers, with parliament voting early Wednesday morning to overturn it. However, military officials said the law will remain in place until President Yoon lifts it.
South Korea stocks pared their losses following the parliament's vote to overturn the martial law decree and after South Korea's finance officials said that would provide "unlimited liquidity" to stabilize financial markets.
The iShares MSCI South Korea ETF was down about 3% after the order declaring martial law was overturned, while shares of Coupang pared their losses to about 4%.