Yoon Impeachment Passed, Capital Market "Uncertainty Resolved... Expecting Quick Decision from Constitutional Court"

As the impeachment motion against President Yoon Suk-yeol passed the National Assembly plenary session on the 14th, political uncertainty has decreased, leading to expectations that the domestic capital market will generally regain stability. However, it is interpreted that volatility will only decrease if the political turmoil ends in a short period.

Yoon Geon-su, chairman of the Korea Venture Capital Association, said, "Some uncertainty has been resolved, but this is just the beginning," adding, "From the market's perspective, this phase needs to end quickly. We hope the Constitutional Court will reach a swift conclusion." Chairman Yoon also stated, "The atmosphere where necessary tasks cannot be done and the path forward cannot be taken must be resolved as soon as possible."

Since the Constitutional Court is scheduled to decide on the acceptance of the impeachment within 180 days after receiving the case, and if accepted, a presidential election will be held within 60 days, the schedule has been outlined, allowing the market to respond accordingly.

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Having resolved major uncertainties, the domestic stock market is expected to actively seek upward momentum, but weakened fundamentals and the still-high won-dollar exchange rate may act as obstacles. The worst-case scenario feared by the market was a prolonged impeachment political situation with repeated rejection and resubmission of the impeachment motion, making it difficult to predict the development pattern; however, it is now assessed that the worst has been avoided.

In the securities industry, since the upcoming schedule has been roughly established, it is evaluated that the peak of uncertainty has passed. The net selling volume by individual investors (combined KOSPI and KOSDAQ) recorded 1.2021 trillion won on the 9th and gradually decreased to 98.2 billion won on the 13th. Experts generally agree that recovery to the level before the emergency martial law situation will be possible without difficulty.

Foreign investors have shown a net selling dominance of 914.6 billion won in the KOSPI as of the 13th this month. Since turning to net selling in August, they have sold over 20 trillion won in total for five consecutive months. Many evaluations suggest that improvement in supply and demand is unlikely in the near term.

Global private equity firm Blackstone recently officially expressed its stance regarding concerns about investment sentiment contraction due to political instability in Korea, stating that it "has firm long-term confidence in the Korean market."

In a statement released the previous day, Blackstone clarified, "The claim that Blackstone headquarters issued instructions to the Korean investment team to be cautious about investing in the Korean market is completely untrue." This was an active explanation in response to reports alleging that the headquarters had issued investment caution guidelines amid recent political instability in Korea.

In the market, concerns arose that overseas major investors' demand for investment in the Korean market had declined as political instability prolonged following President Yoon Suk-yeol's declaration of martial law. Tension also prevailed among private equity funds that need to secure funds from overseas limited partners (LPs), as well as companies preparing for mergers and acquisitions (M&A). However, the perspective of overseas financial investors (FIs) on the Korean market remains solid, including Blackstone.

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