Asian markets traded lower on Wednesday following a disruptive political crisis in South Korea. President Yoon Suk Yeol’s sudden imposition of emergency martial law, which was later revoked within hours, unsettled global markets and heightened uncertainty in the region.

South Korean markets faced sharp declines, with the Kospi index falling as much as 2.3% and the Kosdaq sliding 2%. Samsung Electronics, the nation’s largest company, saw its shares drop 3% before recovering slightly to close 1.12% lower.

This attempt marked South Korea’s first martial law declaration in over four decades and sparked the most intense political crisis in the country’s modern democratic history.

The South Korean won experienced significant volatility, initially plunging over 3% to hit a two-year low of 1,444 per dollar before rebounding to 1,415 following the revocation of the emergency decree.

The announcement triggered widespread protests and a political standoff as lawmakers voted against the martial law declaration, escalating tensions in Asia’s third-largest economy. 

In response, the South Korean finance ministry assured markets of its readiness to inject “unlimited liquidity” to ensure stability if required.

The announcement came after Finance Minister Choi Sang-mok and Bank of Korea Governor Rhee Chang-yong held emergency talks overnight, and as the central bank board abruptly met to approve rescue measures for the local credit market, Reuters reported.

Broader Asian Market Performance

The turmoil in South Korea weighed on investor sentiment across the region. Japan’s Nikkei 225 fell 0.4%, while the Topix declined 0.6%. Hong Kong’s Hang Seng index dropped 0.25%, and Mainland China’s CSI 300 lost 0.5%.

However, not all markets mirrored the decline. Singapore, Taipei, and Manila bucked the trend, posting modest gains, even as Sydney and Wellington registered losses.

Investors remain cautious as they closely monitor developments in South Korea, with potential ramifications for regional stability and market dynamics.

(With inputs from Agencies)