The election outcome removes one of the biggest overhangs impacting the local market — how the country proceeds politically after former President Yoon Suk Yeol’s brief imposition of martial law last year, which led to his ouster and Tuesday’s snap election.
Market focus now turns to Lee’s policies aimed at shoring up growth, centered on more government spending, improved corporate governance and stronger labor protections, as well as wrapping up ongoing tariff negotiations and currency talks with the Trump administration. Korea’s economy contracted in the first quarter, underscoring its weakness even before US President Donald Trump’s announcement of tariff hikes in early April.
Despite political uncertainties and a sluggish economy, Korean stocks and the won have shown resilience this year, outperforming most of their Asian peers. The won got support after Yoon was removed in April, and it’s one of Asia’s best performers.“It will be all about the new president, Lee Jae-myung, today,” Shawn Oh, equity trader at NH Investment & Securities, said, adding the market will likely react to Lee’s pledges on improved corporate governance.
Kospi has risen about 12% year-to-date before the election, reflecting investors’ scouring for value after it dipped into a bear market earlier this year on concerns over US tariffs. The gauge was strengthened by the rallies in industrial and energy sectors, including nuclear energy stocks, shipbuilders and arms exporters.
Financial stocks also contributed to Kospi’s surge in the run-up to the election on bets that corporate reform policies pledged by the candidates would bear fruit.
On the campaign trail, Lee stated his target for Kospi to reach the 5,000 level, without giving a timeline. The goal — while representing a sharp jump from the current level — underscored his emphasis on the equities market and vows to lift local stocks’ valuations and end the “Korea discount.”
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