Markets reeling in South Korea

Tension and uncertainty could last for months

South Korea's stock market has nosedived following the impeachment of President Roh Moo-hyun.

Stock market falls knocked down the shares prices of global IT exporters Samsung and Hynix Semiconductor.

The Kospi stock index sank 5.5% seconds after the impeachment, before regaining some ground to close down 2.4%.

The South Korean currency, the won, slumped 1% against the dollar; $1 was fetching 1,180 won by the end of Friday trading in Seoul.

The Kospi index is now at its lowest level for five weeks.

Turbulent times

And the dramatic scenes as MPs loyal to Mr Roh fought to block the vote underscored that South Korean markets may have volatile times ahead.

Finance Minister Lee Hun-Jae has shouldered the task of preventing political uncertainty turning into economic turmoil.

Mr Lee pledged to "work out a perfect plan for economic stability" and to protect the country's credit ratings on its sovereign debts.

Prime Minister Goh Kun has been appointed acting head of state for a period of up to six months. Meanwhile, South Korea goes to the polls in April.

"Wide swings are inevitable until April's general elections bring some stability to the political scene," said fund manager Seo Chung-ho of Daehan Investment Trust Co in Seoul.

He warned that "the pinch will be felt even more severely" if global credit ratings agencies were to downgrade to South Korea's sovereign debt because of the political crisis.

South Korea is the fourth biggest economy in Asia and holds thirteenth place globally, having transformed itself from a poor, rural country to one powered by consumer spending and hi-tech exports in the last forty years.

The concern now is to avoid upsets, particularly to consumer confidence, as shopping accounts for about half of the economy.