In the past several hours, global investors unexpectedly faced a shock from the geopolitical whirlwind. The "south korean martial law incident" shocked the world, but wall street analysts generally believe that the impact on usa investors is minimal, though international investors should pay close attention.

What happened?

Late Tuesday night, south korean president Yoon Suk-yeol suddenly announced an emergency martial law order, citing the existence of "anti-state forces" among domestic political opponents. Although he was subsequently defeated in his confrontation with the National Assembly and was forced to revoke the martial law, his move shocked the entire south korea and made global investors "break out in a cold sweat"; this was the first time martial law was declared in the country since 1980.

On that morning, the south korean central bank also held an emergency countermeasure meeting, issuing measures to increase short-term liquidity and stabilize the market. In the statement released after the meeting, the south korean central bank stated that, if necessary, it would also provide any special loans to inject funds into the market.

Market observers pointed out that Yoon Suk-yeol's actions led to an inflow of funds into traditional safe-haven assets, including usa treasury bonds, resulting in the depreciation of the south korean mmf and raising concerns about political turmoil in south korea.

South korea is an important ally of the usa and a key part of the global supply chain.

Krishna Guha, head of the evercore ISI global policy and central bank strategy team, stated in a report that while the situation in south korea has not caused significant impact on global markets, it has indeed triggered an inflow of safe-haven funds into the usa, japan, and swiss franc.

What should investors pay attention to?

First of all, most Wall Street analysts believe that USA investors do not need to worry too much, as this crisis will pass quickly.

CFRA Chief Investment Strategist Sam Stovall stated in a recent interview: "I think you should remain calm because this is something unplanned and unexpected, and likely to be short-lived. By the time many investors react and withdraw, the market bottom may have already formed."

Citi analysts also commented in a report: "In our view, the negative impact on the economy and financial markets may be short-lived. With supportive proactive policy responses, the uncertainty in south korea's political and economic environment may quickly ease."

However, at the same time, Wall Street analysts pointed out that global investors should closely monitor the developments.

Rory Green, a strategist from investment consulting firm TS Lombard, warned in a report, "Given south korea's prominent role in the global supply chain, it deserves special attention. Meanwhile, political turmoil may continue to unfold, and Yoon Suk-yeol is destined to face impeachment now."

He also expects that the presidential election will be held in early Q2 of 2025, with the opposition Democratic Party being the favored "candidate to win."

Bob Savage, head of Market Strategy and Insights at New York Banks (BNY), also stated in a report: "The volatility triggered by south korea's political events continues, and it is unlikely to end, even though the implementation of martial law seems to be a fleeting event."

"The differences between Congress and the president, along with expectations for changes in usa trade, will test the policy makers in south korea," he added.

Analysts Mark Williams and Gareth Leather from capital economics pointed out, "It is hard to underestimate how surprising President Yoon Suk-yeol's actions have been. This event will severely undermine investor confidence in the south korean economy and its financial markets."

Moody's Analytics also stated in a report that if any further political impacts are not addressed in a timely manner, it will affect the government's ability to effectively pass important legislation and respond to numerous crises, including the fragile economic growth outlook, challenging geopolitical environment, and structural constraints arising from an aging population.

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