South Korea stocks pummeled amid government turmoil following declaration of martial law

• South Korean stocks plunged after President Yoon Suk Yeol declared martial law Tuesday evening.
• He cited threats from North Korean forces and the opposition party's actions as reasons for the move.
• South Korea's parliament overturned the order by popular vote, which helped stabilize markets.

South Korean stocks plunged on Tuesday after the country's president proclaimed martial law was in effect.

The country's stock market does not open until 7 p.m. ET, 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 South Korean President Yoon Suk Yeol's declaration, while shares of the e-commerce company Coupang, which serves the country, plunged 10%. KB Financial Group saw its shares decline 6%, while the steel company POSCO Holdings declined 8%.

The South Korean won plunged as much as 3% relative to the US dollar.

Yoon, 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.

He 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," Yoon said. "The martial law is aimed at eradicating pro-North Korean forces and to protect the constitutional order of freedom."

According to Reuters, he added: "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."

It's 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 banned and 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.

President Yoon has since said he will immediately lift the martial law decree once he convenes a meeting with his cabinet.

South Korean stocks pared their losses following the parliament's vote to overturn the decree and after South Korea's finance officials said the government 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%.

Correction: December 3, 2024 — An earlier version of this story misidentified where Coupang is based and misstated the status of the martial-law order. Coupang is a US-based company that primarily serves South Korea, and the martial-law order is still in effect until the president officially lifts it. The parliament's vote itself did not end the order.