South Korean President Impeached Over Martial Law Turmoil 

President Yoon Suk Yeol of South Korea was impeached by a National Assembly vote on Saturday, suspending him from office after he declared a brief emergency martial law earlier this month. The move sparked widespread outrage and plunged the nation into a constitutional crisis. Now, the Constitutional Court must decide whether to reinstate Yoon or formally remove him—a process that could take 180 days. 

The National Assembly voted to impeach Yoon, with 204 lawmakers in the 300-member house in favor of the motion and 85 against. Eight votes were declared invalid, while three lawmakers abstained from voting. 

Source: Bloomberg 

The vote comes one week after Yoon survived an impeachment vote last Saturday, capping a week of political turmoil in the country that borders North Korea. This follows Yoon's declaration of the briefest martial law in South Korean history on December 3, lasting only a few hours, after accusing the opposition party of engaging in 'anti-state activities.' Notably, this political turmoil is some of the worst in South Korea since full-scale martial law was declared in the spring of 1980. 

Under South Korea's Constitution, Yoon's impeachment allows Prime Minister Han Duck-soo to become interim leader. 

At a news conference earlier, Park Chan-dae, the opposition leader of the Democratic Party, told reporters: "This is a victory for the South Korean people and for democracy." 

Given that the Constitutional Court will now decide whether to reinstate or remove Yoon, Goldman's Goohoon Kwon and Andrew Tilton provided clients with the possible transition scenarios last week. That process could take up to six months. Here's what comes next: 

Eric Easley, a professor at Ewha University in Seoul, told The Guardian that South Korea's political turmoil is unlikely to subside even with Yoon's impeachment: "It is not even the beginning of the end." 

"Opposition leader Lee, who narrowly lost to Yoon in 2022 and is favored to win an election to replace him, is also in legal jeopardy, with a conviction on appeal and other rulings pending that could disqualify him from office," The Guardian noted. 

Easley added, "So before the final race in the polls, there will be a race in the courts." 

Shortly after the impeachment, Yoon said, "Although I am stopping for now, the journey I have walked with the people over the past two and a half years toward the future must never come to a halt. I will never give up."  

Also, the Goldman analysts warned of another scenario that could unfold: "... muddling through in a political gridlock." 

The unfolding political turmoil was enough for the analysts to maintain a below-consensus growth forecast for South Korea of 1.8% in 2025, with "risks increasingly skewed to the downside ..."

South Korea's finance minister and central bank governor are expected to meet on Sunday to discuss the future economic impact of the political turmoil storm. 

Bloomberg Economics' economist Hyosung Kwon provided readers with a summary of today's events:

"With today's impeachment vote passing, concerns over a leadership vacuum in South Korea's policy-making may ease. But it doesn't mark the end of political uncertainty."

"The key question now is whether Acting President and Prime Minister Han Duck-soo can effectively navigate the deeply divided political landscape to address the threats from the Trump administration's trade and foreign policies, while awaiting the Constitutional Court's ruling."

The question for market observers is whether Yoon's impeachment eases political uncertainty and helps stabilize sentiment.

MSCI South Korea ETF (EWY)

Graham Ambrose, managing director of Goldman Sachs' equity franchise sales team in London, told clients last week that there could be "buying opportunities in Seoul in coming days."

Yoon's impeachment should relieve some market uncertainty. However, the focus now shifts to a long waiting period as the Constitutional Court deliberates its decision.