Political uncertainty surrounding South Korean President Yoon Suk Yeol has spurred heated activity on prediction market Polymarket on Wednesday.
What Happened: Data from the prediction market shows a 37% probability of Yoon being impeached before the end of 2024.
Another Polymarket question gives a 29% chance of Yoon being removed from office, underscoring heightened political instability in the country.
This uncertainty has already rippled through South Korea's financial markets.
Key technology and industrial stocks have taken a hit, with Samsung Electronics (OTC:SSNLF) down 1.12%, NVIDIA (NASDAQ:NVDA) supplier SK Hynix (OTC:HXSCF) slipping 0.061%, and Hyundai Motor (OTC:HYMTF) falling 0.70%.
The turmoil has also affected U.S.-listed South Korean equities, with Posco Holdings (NYSE:PKX) dropping 4.36% in regular trading before seeing a slight recovery after hours.
South Korean ETFs in the U.S., including the iShares MSCI South Korea ETF (NYSE:EWY) and Franklin FTSE South Korea ETF (NYSE:FLKR), also saw mixed performances, signaling broader market apprehension.
The situation has also impacted the South Korean won, which weakened by 0.21% against the U.S. dollar, trading at 1,416.65.
Analysts noted that South Korea’s crucial role in global supply chains, particularly in semiconductors and automotive production, amplifies the stakes of this political drama.
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Why It Matters: The cryptocurrency market, too, felt the shockwaves.
Major coins like Bitcoin and Ethereum plunged on Upbit, South Korea’s largest crypto exchange, trading at a steep discount compared to international markets.
Bitcoin (CRYPTO: BTC) dropped as low as $71,800 on Upbit compared to $95,500 on Coinbase, while Ethereum (CRYPTO: ETH) fell to $2,700 on Upbit before recovering.
The Korea Premium Index, which tracks price differences between South Korean and global exchanges, dipped to -14.67 during the chaos, signaling significant retail selling pressure.
However, the situation stabilized after President Yoon reversed his martial law decision following parliamentary pushback, with Bitcoin and Ethereum rebounding to align more closely with global prices.
Analysts noted this episode's divergence from the traditional "Kimchi Premium," where South Korean crypto prices often trade at a significant premium.
Historical patterns add further context to the political stakes.
South Korea has a tumultuous history of leadership changes, with several former presidents either overthrown, impeached, or imprisoned.
Yoon's presidency, marked by controversy and challenges, now faces increasing scrutiny and the potential for a similar fate.
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