S&P downplays martial law impact on S.Korean economy

Global credit rating agency Standard & Poor's (S&P) said on Thursday "the introduction and swift revocation of martial law in South Korea is very unexpected for a sovereign at the “AA” rating level."

"Investor confidence will likely take longer to normalize," The company explained. "The extent of the hit on economic, financial and fiscal credit metrics will also take a while to clarify."

According to the S&P report “Bulletin: Effects of Korea's brush with martial law may linger”, the developments overnight likely undermined perceptions of political stability among investors.

S&P sees "the negative impact on market sentiments as being contained within Korea’s current credit metrics and unlikely to trigger a rating change in the next year or two."

"The swift revocation of the martial law order and the return to relative stability without serious violence showed that checks and balance in the political system are functioning," S&P expressed. 

S&P said "the announcement of government support for South Korean financial markets, and subsequent measures introduced by the Bank of Korea, have limited immediate volatility."

Write to Se-Min Huh at semin@hankyung.com