South Korea’s Overnight Martial Law Chaos Causes Confusion
Uncertainty has hit Korean ADRs.
South Korean President Yoon Suk Yeol has attempted to declare martial law amid parliamentary disputes. The National Assembly voted down the declaration.
Why it matters: On the news, Korean ADRs fell around 6%, while the Korean won fell around 1.9%. If martial law is indeed imposed, South Korea’s democratic processes and freedoms would be suspended, and a negative economic impact would be likely.
The bottom line: We don’t expect the ADR selloffs to continue. However, we may see a subdued but still negative effect on share price action in the Korean market when it opens for trade.
- These events highlight the continued political risks and leadership issues in South Korea.
- Our fair value estimates of the Korean companies in our coverage are unchanged, since we see this as a short-term issue. We think share price weakness is an opportunity to buy selectively. SK Hynix HXSCF is a preferred stock, benefiting from AI-related server demand.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
United States