Seoul, South Korea – South Korea's stock market experienced a significant downturn on [Date] as the nation grapples with a deepening political crisis. The KOSPI index, the benchmark stock market index of South Korea, plummeted below the 2,400 level amid growing calls for the impeachment of President Yoon Suk-yeol following the controversial declaration of martial law.
The escalating political tensions have triggered a wave of selling by both foreign and domestic investors. Retail investors, in particular, offloaded a combined 750 billion won worth of stocks on the KOSPI and KOSDAQ markets, exacerbating the market's decline. The won-dollar exchange rate also surged, nearing the 1,430 won mark, reflecting the heightened uncertainty in the financial markets.
The KOSPI index closed at 2,428.16, down 13.69 points or 0.56% from the previous trading session. The index had opened higher but quickly reversed course following calls by the opposition leader for President Yoon's suspension and the emergence of rumors about a second martial law declaration.
"Market participants are adopting a wait-and-see approach amid the rapidly evolving political situation, and the upcoming impeachment vote will likely determine the future direction of the stock market," said Kim Ji-won, a research analyst at KB Securities.
Foreign investors continued their selling spree, offloading 309.3 billion won worth of South Korean stocks, while domestic institutional investors were the sole buyers, purchasing 826 billion won.
The KOSDAQ index also suffered a sharp decline, falling more than 3% at one point to reach a 4-year and 7-month low. The index eventually closed at 661.33, down 9.61 points or 1.43%.
The won-dollar exchange rate closed at 1,419.2 won, up 4.1 won from the previous session. The currency's volatility was attributed to the political uncertainty and the strengthening of the U.S. dollar in the global markets.
"With the possibility of additional interest rate cuts by the Bank of Korea diminishing and foreign investors becoming increasingly cautious, the won is likely to face downward pressure," said Lee Nak-won, an FX derivatives specialist at NH Nonghyup Bank. "The political situation, particularly the declaration of martial law, has further solidified the expectation of a sustained high exchange rate."
[Copyright (c) Global Economic Times. All Rights Reserved.]
