S Korean financial markets fluctuate sharply after martial law turmoil

South Korean financial markets have fluctuated violently in the wake of political turmoil and the short-lived implementation of martial law from Tuesday evening to Wednesday morning.

South Korean President Yoon Suk-yeol declared emergency martial law Tuesday night in a televised emergency address, claiming to eradicate "anti-state" forces and uphold free constitutional order, marking the first martial law declaration since the country's military dictatorship ended in the late 1980s. He lifted the order hours later in accordance with a vote by the country's parliament.

The won-dollar exchange rate fell to 1,446 won to the dollar during night trading after martial law was declared, the lowest in 15 years. The exchange rate has risen to 1,414 won to the dollar as of 18:30 local time (0930 GMT).

After lengthy deliberation, the South Korean government finally confirmed that the financial market would trade normally more than an hour before the opening, and the Korean Composite Stock Price Index fell by about 2 percent during the day.

Experts said that Yoon's maneuver was likely rooted in the country's financial and trade woes, noting that forceful measures may be necessary to ensure prolonged stability.

"It's not a positive time for South Korea. The memory chip cycle is on a downturn, as you can see that the October exports are in contraction, and the BOK had to cut rates, domestic demand is rather weak, so we really need a strong government to have a budget that is fiscally supportive, not for the short term but longer term to deal with a lot of challenges," said Trinh Nguyen, senior economist at investment banking company Natixis.

"Railroading efforts by the opposition party by the weekend to starve the presidential office and some of the offices that report to him of crucial revenue for next year, which for Yoon, I think, crossed the Rubicon a bit in terms of political maneuvers, and if anything was was one of the reasons why he was willing to escalate a bit and declare martial law," said Jeremy Chan, senior analyst for China and Northeast Asia at Eurasia Group.

In order to cope with continued market instability, the country's Ministry of Economy and Finance has geared up for measures including providing unlimited liquidity to financial markets when necessary.

Financial Services Commission on Wednesday morning stated that a stock market stabilization fund of 10 trillion won (about 7 billion U.S. dollars) will be put into operation at any time.

S Korean financial markets fluctuate sharply after martial law turmoil

The world needs openness and collaboration rather than punishment and protectionism, said a Nobel Laureate in economics in a recent interview with China Global Television Network (CGTN).

Christopher Pissarides is a Regius Professor of Economics at the London School of Economics and the 2010 Nobel Laureate in Economic Sciences for his development of search matching theory.

He's also a long-time China observer and has attended the China International Import Export four times in a row.

Now an international consultant at universities in China, he visits China regularly and has his own analysis of China's electric vehicle (EV) industry, including the obstacles it faces when going abroad.

He said innovation and favorable policies are key to reduce costs of producing EVs while insinuating the European Union's (EU) countervailing duties on Chinese-made EVs.

"I think we should embrace the new technologies and encourage more production in that direction, not try and stop trade and punish each other. My view about Europe is that Europe needs an industrial policy in light of the new technologies and new competition, which it doesn't have now, and (so) their response to seeing all these Chinese vehicles, maybe there are indirect forms of subsidizing the production of EVs in China. But I would welcome that because that's the direction we want to go," said the expert.

"Productivity growth comes from innovations and help from the government that reduces costs. So, if another country manages to reduce its costs one way or another, then try doing it yourself. You cannot get strong by punishing others. And I feel about that actually not only with EVs. A global economy that works on similar kinds of rules will always be stronger than several smaller ones that are protected into their own and think on their own," he said.

During the interview, Pissarides also called on all countries to embrace openness for a better future.

"I'm very much in favor of the openness of the economies, that we should be open, trading with each other, exchanging ideas and collaborating in the development of science. So my main wish, if you like now and what I would like to see countries doing, is actually getting activated quickly and put into practice those openness measures that have been announced," he said.

World needs openness, collaboration, not protectionism: Nobel laureate