South Korean markets traded sharply lower on Wednesday following a dramatic political upheaval that saw President Yoon Suk Yeol briefly impose and then quickly withdraw martial law after facing parliamentary opposition.

What Happened: The benchmark Kospi index fell 1.15% to 2,471.27, while the tech-heavy Kosdaq 100 dropped 2.64% as of 9:49 am local time, according to data from Benzinga Pro.

The political uncertainty particularly affected major technology and industrial stocks, with Samsung Electronics Co. (OTC:SSNLF) declining 1.12%.

NVIDIA Corp (NASDAQ:NVDA) supplier SK Hynix (OTC:HXSCF) saw its shares drop 0.061%. Other industrial heavyweights also suffered, with Hyundai Motor (OTC:HYMTF) falling 0.70% and U.S.-listed Posco Holdings Inc (NYSE:PKX) declining 4.36% to $47.77 on Tuesday's regular session. Still, the stock recovered marginally in after-hours trading.

U.S.-based funds tracking South Korean equities showed signs of recovery in after-hours trading, with the iShares MSCI South Korea ETF (NYSE:EWY) rebounding 0.25% after earlier losses exceeding 6%. The Franklin FTSE South Korea ETF (NYSE:FLKR) gained 0.53% after hours.

The political turbulence also impacted currency markets, with the South Korean won weakening 0.21% against the U.S. dollar to 1,416.65.

The market reaction highlights South Korea's crucial role in global supply chains, particularly in semiconductor manufacturing and automotive production, where many companies serve as essential suppliers to major U.S. firms.