South Korea’s Constitutional Court upholds impeachment of President Yoon, ousting him from office

South Korea’s Constitutional Court Friday upheld the impeachment of President Yoon Suk Yeol, ousting him from office.

The decision now starts a 60-day countdown where a presidential election must be held to select the next president. In the interim, Prime Minister Han Duck-soo has been reinstated as acting president following a decision by the constitutional court on March 24.

In a broadcast on South Korea television, the acting chief of the Constitutional Court Moon Hyung-bae said the decision was unanimous.

Moon said that the former president’s declaration of martial law did not meet the legal requirement for a national crisis.

He added that Yoon had violated the law by sending troops to the country’s parliament to stop the reversal of martial law, according to a translation by local media Yonhap.

Following the decision, South Korea’s Kospi plunged 1.66%, and the small cap Kosdaq fell 0.85%. The South Korean won strengthened about 1%.

South Korea’s Democratic Party declared the ruling a “people’s victory,” while Yoon’s People’s Power Party said it “humbly accepts” the court’s decision, according to Yonhap.

South Korea’s finance minister has convened an emergency meeting with Bank of Korea governor Rhee Chang-yong, as well as the heads of the country’s financial supervisory service and financial supervisory commission “to examine the impact on the financial and real economy following the Constitutional Court’s ruling,” according to a Google translation of a media report from the Seoul-based Chosun Biz.

Yoon was impeached over his imposition of martial law on Dec. 3 in a surprise late-night broadcast, citing the need to protect the country from “North Korean communist forces” and “anti-state forces.” This was the first time martial law was declared in South Korea in over 40 years.

Lawmakers then voted down the decree at the country’s parliament, hours after the martial law declaration, before filing impeachment motions against Yoon a few days later. Yoon was impeached on Dec. 14 and suspended from office.

Speaking to CNBC after the ruling, Homin Lee, senior macro strategist at Swiss private bank Lombard Odier said the verdict should provide greater clarity for South Korea’s governance in the next few years and offset some of the negative sentiments stemming from Trump’s punitive reciprocal tariffs.

The Presidential by-election is not a done deal, he said. However investors will likely assume opposition party leader Lee Jae-myung will be the frontrunner, and closely watch his policy signals, Lee added.

Lee does expect near-term turmoil in the South Korean markets though, saying “investors will continue to grapple with the shock from Trump’s reciprocal tariffs.”

Lee said he has a “neutral” call on South Korea, noting that “uncertainties on trade are balanced by the return of normal politics and undemanding asset valuations.”