South Korea’s president Yoon Suk Yeol has unexpectedly declared emergency martial law, a move that came as a surprise to both investors and analysts, prompting a sharp sell-off in South Korean stocks listed in the US and UK.

At the time of the announcement, the Korea Composite Stock Price Index or KOSPI (^KS11), the country's primary stock market, was closed, leaving traders anxious as they awaited its reopening to understand the full impact of the declaration.

However, the US- and UK-listed shares of major South Korean companies took a hit immediately following the news.

Coupang (CPNG), South Korea’s largest online retailer, saw its stock drop by 6%, signalling investor concerns over the political instability triggered by the martial law declaration.

Posco (PKX), the country’s leading steelmaker, experienced a 5% decline, reflecting worries about the broader implications for industrial sectors.

Read more: LIVE: FTSE up and US stocks tepid as South Korea declares martial law

Samsung Electronics (SMSN.IL), the world’s largest semiconductor maker, saw its UK-listed shares fall by 7%, with investors nervously eyeing the fallout from the political crisis. Captivision (CAPT), a South Korean company specialising in architectural media glass dropped by over 10%.

"This has really come out of the blue," said Gareth Leather, a strategist at Capital Economics, told Barron's. "It’s not really clear what the martial law is aimed at. It serves as a reminder that Korea’s political system isn’t as stable as many people thought it was."

The iShares MSCI South Korea exchange-traded fund (EWY) dropped 4.5% in pre-market trading

The South Korean currency slumped to a two-year low after the declaration. The won (KRWUSD=X) was down by almost 3% against the dollar to 1443, its weakest level since October 2022.

“This is not a normal thing to happen in a developed economy,” said Lee Hardman, a currency analyst at MUFG, adding that he expected the won to come under further pressure.

In the coming days, investors will be watching the performance of South Korea’s largest and most influential companies. These include Samsung Electronics (005930.KS), SK Hynix (000660.KS), a major chip maker, LG Energy Solution (373220.KS), a key player in the electric vehicle battery sector.

Other Korean stocks to keep an eye out are Hyundai (005380.KS), South Korea's largest automaker, along with those of its sister company Kia (000270.KS). Markets will be monitoring for any indicators of how political unrest affects South Korea’s key industries.