South Korean stocks continued their sharp decline on Thursday, December 5, 2024, marking the second consecutive day of losses amid growing political uncertainty and the looming threat of martial law. The country’s benchmark Kospi index fell 0.25%, or 6.06 points, to 2,457.94, following a 1.4% drop the previous day. Investors are deeply concerned about the ongoing political turmoil, which has escalated following President Yoon Suk Yeol's controversial attempt to declare martial law.

On Thursday, the South Korean parliament introduced a motion to impeach President Yoon for his failed attempt to enforce martial law. Yoon's party has vowed to block the motion, leaving the future of the impeachment process uncertain. This political upheaval has stirred anxiety in the financial markets, further deepening fears about the potential instability in the country.

Despite the market-wide downturn, some stocks showed signs of resilience. Shares of Samsung Electronics rose by 1.88%, while SK Hynix, a major semiconductor player, gained 4.05%. LG Energy Solution, a key player in the battery sector, saw a modest increase of 0.13%. However, the automotive sector experienced significant losses, with Hyundai Motor's stock falling 1.67% and Kia Corp., its affiliate, dropping 2.75%.

While some sectors experienced gains, the overall market sentiment remains negative, as reflected by the 641 stocks that declined out of the 935 traded. Foreign investors were particularly wary, recording a net outflow of 223 billion won ($157.7 million), contributing to the overall market decline.

In response to the growing instability, the South Korean government activated a market stabilization fund worth 40 trillion won ($28.35 billion) in an attempt to cushion the impact of political turmoil and martial law concerns. Financial analysts are closely monitoring the situation, as the country’s economy is heavily dependent on exports, and political instability could damage South Korea’s standing in international markets.

According to a business expert, "The martial law declaration has only added to the uncertainty, making it harder for global investors to predict the country's future economic performance." With the specter of impeachment and martial law hanging over the nation, it is unclear how long the political crisis will affect South Korea’s economy.

As the situation continues to develop, both investors and business leaders are anxiously awaiting clarity on the political situation. How the government handles the martial law crisis will be critical in restoring investor confidence and stabilizing the market.

KONTAN