'In the Fog' Stock Market: Despite Increased Volatility, Preference for Stocks Likely to Continue

KOSPI and KOSDAQ Both Rising
New York Stock Market Also Closes with Significant Gains
Delayed Election Results Increase Volatility
Significant Impact Expected on Industries like Renewable Energy

On the 5th, as the vote counting for the 46th U.S. presidential election was underway, dealers were working in the dealing room of Hana Bank in Euljiro, Seoul. On the same day, the KOSPI index opened at 2,373.41, up 16.09 points (0.68%) from the previous trading day, maintaining a strong trend. The won-dollar exchange rate opened at 1,130.0 won, down 7.7 won, showing a declining trend. Photo by Moon Honam munonam@

[Asia Economy Reporter Song Hwajeong] In the U.S. presidential election, Democratic candidate Joe Biden has succeeded in overtaking in battleground states and gaining momentum, leading to a strong performance in the stock market. However, with President Donald Trump demanding recounts and filing lawsuits, the final outcome remains uncertain, and market volatility is expected to persist for the time being.

As of 9:15 a.m. on the 5th, the KOSPI rose 1.4% (33.12 points) from the previous day to 2390.44. The KOSDAQ also showed a 1.3% increase. The New York stock market closed with a significant rise on Biden's lead, and the domestic market is interpreted as responding positively to the possibility of Biden's victory.

Although Biden secured a lead overnight in key battleground states and gained momentum, the election results remain uncertain. President Trump has responded with lawsuits and demands for recounts, increasing the likelihood of contesting the election results. Trump filed a lawsuit to halt vote counting in Michigan and requested a recount in Wisconsin. Both states initially showed Trump leading but later flipped to Biden. Yoo Seungmin, head of the Global Investment Strategy Team at Samsung Securities, said, "Since Biden's victory is likely in Wisconsin and Michigan, it is highly probable that he will secure the majority of 270 electoral votes," adding, "President Trump is contesting the election results in these states with recounts and lawsuits, and there is a high possibility he will take similar legal actions in Pennsylvania, where mail-in ballots have not yet been fully counted. Although the election is over, related political conflicts and uncertainties are expected to continue for some time."

Market volatility is expected to increase inevitably. Jo Yeonju, a researcher at NH Investment & Securities, said, "During the 2000 U.S. presidential election, candidate Al Gore demanded a recount, and the Supreme Court ruling favored candidate George W. Bush, ending the recount. The S&P index fell 4.2% from November 7, the election day, to December 12, when the Supreme Court ruling was issued," adding, "If President Trump's contestation delays the announcement of the election results, market volatility will inevitably increase."

Although volatility is inevitable, preference for stocks is expected to continue. Yoo said, "The Biden administration will maintain the existing reflationary policy stance (expansionary fiscal policy + accommodative monetary policy)," and "From an asset allocation perspective, we maintain a forecast to increase the weighting of global stocks." Corporate tax hikes and other uncertainties are factors for the stock market if Biden wins. Yoo explained, "Despite Biden's policy pledges favoring fiscal expansion, the possibility of corporate tax increases and some corporate regulations are uncertainty factors," adding, "However, if a unified government controlling both the House and Senate is not formed, it is expected to be difficult to implement these pledges."

The impact on industries is expected to vary depending on the election outcome. Han Daehoon, a researcher at SK Securities, said, "If Biden wins, he has promised a $2 trillion investment in renewable energy, so the renewable energy sector is expected to gain strength," and "Conversely, if Trump wins re-election after legal battles, existing policies will be maintained, and concerns about tech and platform companies will be partially alleviated, with expectations for 5G infrastructure investment making 5G and equipment companies promising."

This content was produced with the assistance of AI translation services.