Korean market weathering difficulties | Wilnesh News

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South Korea can’t rest either. Over the past month, the country has been under martial law, the current president and president-elect have been impeached, served a second term as acting president (so far), and suffered a tragic plane crash.

What impact will these events have on the Korean market?

Judging from the Kospi index: not much. The index, which tracks all common stocks listed on the Korea Exchange, is above levels on Dec. 3 when impeached President Yoon Seok-yeol declared martial law.

Its resilience can be traced to South Korea’s political history and the Bank of Korea’s swift — and perhaps haphazard — actions.

Yoon and Han Deok-soo are just the latest two presidential figures to be impeached in South Korean history. Before that, Roh Moo-hyun was impeached in 2004 (although the court overturned the impeachment), while Park Geun-hye was impeached in 2016 and dismissed the following year.

Soohyung Lee, a member of the Bank of Korea’s monetary policy committee, told CNBC on January 2 that the uncertainty caused by South Korea’s past two impeachments “will subside within three to six months,” so “political turmoil may not be what it is now.” serious”. It has caused great losses to the national economy. “

The Bank of Korea’s actions also appeared to calm markets.

On the day Yoon lifted martial law, the Bank of Korea announced emergency measures to calm markets and prevent volatility. Likewise, the Bank of Korea could have softened the blow by unexpectedly cutting interest rates by 25 basis points at its November meeting, before Yoon Eun-hye declared martial law in December.

Internal factors may not be the biggest threat to South Korea’s economy and market in the coming year. Lee said downside risks from U.S. President-elect Trump’s tariffs are more concerning, especially for export-driven countries like South Korea.

South Korea’s recent troubles show that when one arm of government fails, other institutions can still prop up a country and its economy — but dealing with other governments is much more difficult.

—CNBC’s Lim Hui Jie and Lee Ying Shan contributed to this report.