South Korean stocks rose 2% as the government pledged market stability after political unrest.

The South Korean stock market rebounded on Tuesday, with the KOSPI index rising by 2.37% to 2,416.64 points, recovering to the brink of the recent bear market slump. This follows a sharp decline due to political turmoil and the failure of a motion to impeach President Yoon Suk-yeol. The small-cap index Kosdaq also rose by over 4%, showing a strong performance.

Last week, the martial law incident led South Korea into a political crisis, dampening market sentiment. On Monday, the KOSPI index fell by 2.8% at one point, reaching its lowest since November 2023, with the two major indices losing about $100 billion in market value over four trading days last week. In response, South Korean authorities stated they would do everything possible to stabilize the market, deeming the recent market volatility "excessive," and reiterated their commitment to taking all possible measures to restore market stability.

President Yoon Suk-yeol survived an impeachment vote in parliament, but opposition parties vowed to continue efforts to remove him. In a joint statement, the South Korean government stated that the government and the Bank of Korea have sufficient capacity to address market challenges and pledged to closely monitor market trends and take emergency measures if necessary. Finance Minister Choo Kyung-ho, Bank of Korea Governor Lee Chang-yong, and top financial regulatory officials will hold daily meetings to assess financial market conditions and take appropriate measures to stabilize the market.

In addition to the political and market sentiment impact, South Korea's main opposition party stated on Tuesday that it would pass a government budget bill for 2025, with budget issues being a trigger for the martial law. Most of the major index stocks saw gains, particularly battery manufacturers, automobile manufacturers, and e-commerce companies performed strongly. Samsung Electronics rose by 1.12%, SK Hynix went up by 0.12%.

Moreover, the Korean won rose against the US dollar, trading at 1,429.5, up 0.38% from the previous trading day. The yield on three-year government bonds fell to 2.521%, and the yield on 10-year government bonds also decreased, with the market responding positively to the South Korean government's commitment to stability.

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