The Korean Kospi index trades at support after the recent political turmoil.
KOSPI – Daily Chart
The price has bounced at the 2,388-2,400 level and will need buyers to hold that level.
Hopes for further Chinese stimulus measures boosted stocks in Asia and traders will hope that the recent bounce can remain in place.
President Yoon declared martial law last Tuesday in an effort to counter “anti-state forces” among his political opponents, but revoked the measure within hours after an immediate backlash. There have now been demands for Yoon’s impeachment by the country’s legislators.
South Korea’s Finance Ministry also announced a 40 trillion won ($28.35 billion) market stabilization fund after Yoon’s declaration disrupted markets. The Bank of Korea may buy bonds, with authorities ready to act under contingency plans if necessary.
Other data showed that South Korea’s economy grew by only 0.1% in the third quarter, unchanged from advance estimates issued earlier. The data comes as the country already faced a sharp depreciation in its assets, including its stocks and currencies. The KOSPI has fallen by nearly 7% this year, while the won has declined about 9% against the US dollar. South Korea had recently celebrated its inclusion into the FTSE Russell’s World Government Bond Index.
Concerns over a potential spillover from South Korea’s political turmoil has kept sentiment cautious towards broader Asian markets. Two days of losses for US stocks may not help the ability for South Korea to see an immediate recovery in asset prices.