Following President Yoon Suk-yeol’s declaration of martial law, shares of major South Korean companies listed on the New York Stock Exchange plummeted on the 3rd, reflecting panic in the financial markets. The market began to stabilize after the National Assembly passed a resolution demanding the repeal of martial law, and President Yoon announced its termination, although significant volatility persisted.

In New York trading, Coupang's stock closed at $23.92, down 3.74% from the previous session. Coupang's shares initially fell as much as 9.8% intraday after the news of martial law but pared losses following the parliamentary resolution.

Other major South Korean companies traded as American Depositary Receipts (ADRs) on the New York Stock Exchange also suffered declines.

Posco Holdings dropped 4.36%, while KB Financial (-1.60%), SK Telecom (-1.63%), KT (-0.44%), Korea Electric Power Corporation (-2.10%), Woori Financial Group (-1.51%), and LG Display (-1.76%) all recorded losses between 1% and 4%. Korean-focused investment products listed on the New York Stock Exchange also faced significant drops, with some falling over 7% intraday.

The iShares MSCI Korea ETF, which tracks major South Korean companies such as Samsung Electronics and SK Hynix, fell 1.59% at the close but had plunged as much as 7.1% intraday following the martial law announcement.

These stocks and ETFs, which trade after Korean markets close, often serve as indicators for the opening direction of the Korean stock market the next day.

Since their prices are denominated in USD, fluctuations in the Korean won’s value also influence their performance.

The KRW-USD exchange rate in New York spiked above 1,440 due to the martial law declaration before moderating slightly.

At 2 a.m. on the 4th, the KRW-USD exchange rate closed at 1,425.00, up 23.70 from the previous session’s close in Seoul.

The rate had ended regular trading hours at 1,402.90 but surged by 22.10 during after-hours trading. It climbed sharply following the martial law announcement, surpassing 1,410, 1,420, 1,430, and finally 1,440. At its intraday peak, the rate reached 1,442.00, the highest level since October 25, 2022, when it hit 1,444.20 intraday.

The daily volatility in the exchange rate reached 41.50 KRW.

To address market instability, Deputy Prime Minister and Finance Minister Choi Sang-mok convened a macroeconomic and financial issues meeting (F4 meeting) at 11:40 p.m. on the 3rd, with the Bank of Korea Governor, Financial Services Commission Chairman, and Financial Supervisory Service Governor in attendance.

Minister Choi stated, "To counter potential market instability stemming from the martial law declaration, we will mobilize all available measures for financial and foreign exchange market stability, including unlimited liquidity supply."

(Reporter: Park Hong-yong)

<Hongyong Park>