Most Asian Stocks Slide as South Korea’s Martial Law Reversal Erodes Confidence
Asian stocks fell on Wednesday, with South Korea’s key index plunging more than 2% after President Yoon Suk-Yeol’s surprising reversal of a short-lived martial law declaration. The sudden U-turn followed a backlash from the public and lawmakers, who rejected the measure and called for the president’s impeachment.
The surprise decision to declare martial law, aimed at combating “anti-state forces” among political opponents, was met with swift criticism, triggering a selloff in South Korean shares. Market analysts warned that the incident could lead to a credit rating downgrade for the country.
Meanwhile, other Asian markets took a negative cue from the South Korean stock market, with Japan’s Nikkei 225 index falling 0.4%, and the China’s Shanghai Composite index decreasing 0.3%. The Singapore’s Straits Times Index lost 0.7%, while the Hong Kong’s Hang Seng Index was slightly lower.
In the Philippines, stocks inched 0.2% lower, while India’s Nifty50 Index indicated a positive open. Thailand’s SET Index climbed 1.3% on speculation that the country’s economy might see a rate cut due to low inflation.
Meanwhile, Australian stocks fell 0.5% after data showed the country’s GDP grew less than expected in the September quarter. The weak reading sparked bets on a potential rate cut by the Reserve Bank of Australia.
China’s services sector growth slowed in November, with the purchasing managers’ index dropping to 51.5 from 52.0, indicating weaker growth in new business and exports. The move prompted investors to seek refuge in Chinese chipmaking stocks, which surged as the government recommended against buying US-made chips, potentially increasing demand for local companies.
The specter of US trade tariffs under former President Donald Trump’s administration continues to weigh on regional markets, which fear a potential spillover effect from South Korea’s political turmoil. As investors await more cues on US monetary policy from Federal Reserve Chair Jerome Powell’s address later in the day, regional markets remain highly sensitive to any signs of US trade actions or policy shifts.