Written by Uncle Banerjee
SINGAPORE (Reuters) – Asian stocks stumbled on Wednesday as traders scrambled over political turmoil in South Korea, where martial law was imposed and lifted hours later, while a no-confidence vote in France puts the euro in the spotlight. Ta.
The South Korean won stabilized after rising amid allegations of interference, but remained near a two-year low against the dollar hit late on Tuesday. The benchmark KOSPI index fell 1.3%, taking its year-to-date decline to more than 7% and making it the worst-performing major stock market in Asia this year.
As a result, MSCI's broadest Asia-Pacific stock index, which covers Asia-Pacific stocks outside Japan and which counts Samsung Electronics as one of its major constituents, is mostly flat, while most Asian markets excluding South Korea are rising. It became.
South Korean President Yun Seok-Yeol announced on Wednesday that he was lifting the sudden martial law he had declared hours earlier, in a setback in a standoff with Congress, which narrowly rejected his attempts to ban political activity.
“Although martial law itself has been lifted, this incident has created further uncertainty in the political situation and economy,'' said Min Ju Kang, senior economist at ING.
“While uncertain at this stage, we are concerned that these events could have an impact on South Korea's sovereign rating. However, this is a likely scenario.”
South Korea's Ministry of Finance has said it is ready to inject unlimited liquidity into financial markets if necessary, and Yonhap News reported that the financial regulator has earmarked 10 trillion won ($7.07 billion) for the Stock Market Stabilization Fund. He said he was ready to invest.
Saxo's chief investment strategist said: “Given the way events are unfolding, there is some uncertainty here and a potential rush to safety. However, South Korean authorities are moving quickly to stabilize the market. “The impact is likely to be short-lived.” Charu Chanana said.
Still, market shocks from East Asia have further heightened concerns about uncertainty around the world, with investors already reeling from political turmoil in France, weighing on the euro at $1.051675. are.
The single currency has fallen 4% since early November, when investors began bracing for widely expected higher tariffs from the incoming Trump administration.
French bond futures fell 0.11% ahead of a no-confidence vote by French lawmakers on Wednesday, but European stock futures were little changed, with the overthrow of Prime Minister Michel Barnier's fragile coalition all but certain. .
