South Korea shocked the world when President Yoon Suk Yeol declared martial law for the first time since the country's transition to democracy in the 1980s. The incident lasted only six hours as legislators voted unanimously to overturn the declaration.

The central bank announced it was ready to inject liquidity in case the instability spread to the financial markets. The key stock index fell 1.4% on Wednesday; the currency sharply dropped before recovering, and bond yields rose.

With Yoon now facing impeachment, South Korea's governance crisis may not be over. As the situation continues to unfold, CEIC has assembled a dashboard with key indicators to track confidence in South Korean financial markets.

First, we consider international fund flows – a high-frequency dataset demonstrating asset allocators' stance towards South Korea

After several swings back and forth in the first half of 2024, net flows into equities have been increasing steadily since mid-June, according to data from our partners at EPFR. The inflow stood at USD 2.1 billion as of early December, year-to-date. Bond funds have been less volatile, but have suffered a net outflow since early August; the year-to-date net inflow has been reduced to USD 1.6 billion.

Turning to daily market performance, we've charted the impact on different sub-sectors of the KOSPI stock benchmark. On Dec. 4, the largest drop – almost 6% – was seen in the construction and machinery sector. Only the steel and materials subindex rose.

Bond yields had been on a long-term downward trajectory this year, as inflation reached a 45-month low. Dec. 4 marked a reversal of that trend.

Meanwhile, the won had been weakening since October, reaching a two-year low even before Dec. 4.

We've added several other charts that go into granular detail about South Korean funds. Assets under management (AUM) for equity funds have reached USD 183.6 billion; AUM for bond funds stands at USD 34.5 billion.

We can also break down South Korean equity funds to show how significant shares are allocated to a variety of asset classes: 9.4% invests in Asia excluding Japan, while 8.9% is allocated to global emerging-market funds. However, those shares have been gradually declining during the last two decades.

Explore more data and visuals:

EPFR Fund Flows and Asset Allocation

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