The declaration of martial law by Korea’s president is an extraordinary step that seems likely to trigger either the suspension of Constitutional democracy in Korea or the president’s own rapid impeachment and removal. For investors the key question is whether the decision is linked to an imminent threat from North Korea – there is little other than the declaration itself to suggest that there is one. Assuming the border remains peaceful and beyond the inevitable short-term shock to financial markets, a period of political instability lies ahead in South Korea that will dent confidence in the economy.
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