South Korea’s Kospi Index Falls 2% Amid Political Turmoil, Will the K-Drama Impact India's D-Street?

South Korea Martial Law: If investors thought the last month of 2024 would bring calm to the global stock market, they were quite wrong. It took just one night for South Korea's president to reverse his emergency political move. The martial law which was imposed by President Yoon Suk Yeol on Tuesday was lifted after 190 MPs in the parliament voted against it.

This was enough to push the mood of the investors into the uncertainty sphere, which was quite evident on Wednesday when South Korea's Kospi index declined by nearly 2 per cent.

Samsung Electronics, the stock with the highest market capitalisation in Kospi (340 trillion South Korean won), also fell by over 1 per cent.

Korea Gas Corporation, which holds a monopoly on the import, transmission and wholesale of LNG in the country, also dropped sharply by more than 17 per cent.

As for the Indian stock market, which has been experiencing a sharp downtrend in the past few weeks, investor sentiment was barely affected by the political chaos being played out in South Korea.

Both domestic benchmark indices were trading in the positive territory during the early trading session. BSE Sensex was up by more than 300 points and was trading at the 81,150 level mark.
However, shares of the Korean-based automobile company, Hyundai Motors witnessed a volatile trajectory on Wednesday and remained in the red territory.

Will the political chaos of South Korea impact Sensex?

At present, the impact seems negligible as India's stock market shows a resilient trajectory. However, just last month, a report indicated that Korean investors are showing huge interest in Indian stocks, drawn by the buy-on-dip opportunity.

With Donald Trump taking back the presidency crown, retail investors in South Korea have increasingly been showing interest in India's stock market. This is largely because Trump's comeback is being seen as a positive factor for India's economy, as per a report by the Korea Economic Daily.

As of last month, Korean retail investors net-purchased 8.1 billion won ($5.8 million) in the Samsung KODEX India Nifty 50 ETF and 11.5 billion won in the Mirae Asset Tiger India Nifty50 ETF during the same period.

It is also worth noting that 2024 has been a year quite full of major events, be it China's economic drawdown, Trump's return to the presidency or India's general election. Despite these major events being played out, India's stock market has remained largely resilient, atleast when compared to its peers, according to many analysts.

While the current political turmoil in South Korea appears to have had little impact so far, its long-term effects remain to be seen.