South Korean stocks experienced significant volatility in the U.S. market on Tuesday due to political turmoil in Korea. President Yoon Suk Yeol was compelled to revoke an earlier declaration of emergency martial law, causing concerns about instability in the country’s economy, which is ranked as the 13th largest in the world.
The iShares MSCI South Korea ETF (EWY), a fund that includes more than 90 large and mid-sized South Korean companies, plummeted by as much as 7%, reaching a 52-week low. However, the ETF managed to recover some of its losses and closed the day down by 1.6% after President Yoon announced the withdrawal of the martial law decree following the National Assembly’s vote to overturn it.
Despite the rebound, the ETF is still facing its fifth consecutive day of decline with unusually high trading volume. Trading volume exceeded 35 million shares on Tuesday, which is more than 10 times the average volume over the past 30 days.
U.S.-traded shares of Korean companies also experienced fluctuations. Korea Electric Power’s American depositary receipts (ADRs) fell over 2%, while e-commerce giant Coupang saw a decline of 3.7%. KT Corp. and Posco, a South Korean steel manufacturer, also witnessed drops in their share prices.
Within three hours of President Yoon’s martial law declaration, 190 out of the 300 National Assembly lawmakers convened to overturn the emergency order. The president accused opposition parties of aligning with North Korea and controlling the parliament, without specifying the impact of martial law on governance and democracy in the country.
In response to the situation, the White House National Security Council stated that they are in communication with the South Korean government and closely monitoring the developments. Under the martial law declaration, all political activities and actions that could incite social unrest are prohibited. This marks the first instance of a South Korean leader declaring martial law since 1980.
See also Eliminating Waste, Fraud, and Abuse in Medicaid My Administration has been relentlessly committed to rooting out waste, fraud, and abuse in Government programs to preserve and protect them for those who rely most on them. The Medicaid program was designed to be a program to compassionately provide taxpayer dollars to healthcare providers who offer care to the most vulnerable Americans. To keep payments reasonable, billable costs for such care were historically capped at the same level that healthcare providers could receive from Medicare. The State and Federal Governments jointly shared this cost burden to ensure those of lesser means did not go untreated. Under the Biden Administration, States and healthcare providers were permitted to game the system. For example, States "taxed" healthcare providers, but sent the same money back to them in the form of a "Medicaid payment," which automatically unlocked for healthcare providers an additional "burden-sharing" payment from the Federal Government. Through this gimmick, the State could avoid contributing money toward Medicaid services, meaning the State no longer had a reason to be prudent in the amount of reimbursement provided. Instead of paying Medicare rates, many States that utilize these arrangements now pay the same healthcare providers almost three times the Medicare amount, a practice encouraged by the Biden Administration. These State Directed Payments have rapidly accelerated, quadrupling in magnitude over the last 4 years and reaching $110 billion in 2024 alone. This trajectory threatens the Federal Treasury and Medicaid's long-term stability, and the imbalance between Medicaid and Medicare patients threatens to jeopardize access to care for our seniors. I pledged to protect and improve these important Government healthcare programs for those that rely on them. Seniors on Medicare and Medicaid recipients both deserve access to quality care in a system free from the fraud, waste, and abuse, that enriches the unscrupulous and jeopardizes the programs themselves. We will take action to continue to love and cherish the Medicare and Medicaid programs to ensure they are preserved for those who need them most. The Secretary of Health and Human Services shall therefore take appropriate action to eliminate waste, fraud, and abuse in Medicaid, including by ensuring Medicaid payments rates are not higher than Medicare, to the extent permitted by applicable law. This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person. DONALD J. TRUMP
The Korea Exchange announced that the stock market would resume trading as usual at 9 a.m. KST on Wednesday. The U.S. dollar strengthened by approximately 0.9% against the South Korean won on Tuesday.
The events in South Korea have raised concerns about the stability of the country’s economy and the impact of political turmoil on financial markets. Investors will be closely watching for further developments in the coming days to assess the long-term implications of the situation on South Korea’s economic prospects.
