Biden-Driven Domestic Stock Market Rally... KOSPI Hits New Intraday High

Uncertainty Resolution and Policy Optimism
Secondary Battery and Renewable Energy Lead
Foreigners Net Buy 2 Trillion Won in One Week
Historically Strong After US Presidential Elections

[Asia Economy Reporters Song Hwajeong, Geum Boryeong] With the confirmation of Joe Biden, the Democratic candidate, winning the U.S. presidential election, the KOSPI has gained upward momentum, hitting an intraday record high. Considering that the KOSPI has historically risen sharply for six months following U.S. presidential elections, it is interpreted that the resolution of election-related uncertainties and policy expectations are driving the stock market upward this time as well.

As of 10:10 a.m. on the 9th, the KOSPI stood at 2,459.04, up 1.76% (42.54 points) from the previous day, setting a new intraday record high. The previous intraday record was 2,458.17, recorded on August 13. The KOSDAQ also rose 1.61% to 850.26.

Influenced by the U.S. presidential election, the domestic stock market has maintained an upward trend recently. The KOSPI, which did not see a single day of decline last week, recovered the 2,400 level, rising 6.59% during this period. The KOSDAQ also increased by 5.57% over the same period.

In particular, expectations for President-elect Biden have led the domestic stock market's rise, driven by sectors such as secondary batteries and renewable energy. LG Chem, classified as a secondary battery stock, rose 15.57% from a closing price of 623,000 won on the 2nd to 720,000 won on the 6th, while Samsung SDI increased 13.41% from 440,000 won to 499,000 won.

The large inflow of foreign capital also helped the KOSPI recover the 2,400 level. Over the past week, foreigners net purchased more than 2 trillion won in the domestic stock market. It is analyzed that the uncertainty surrounding the U.S. presidential election, which had suppressed positive fundamental changes, shifted to expectations and relief, leading to a massive inflow of foreign capital. On this day as well, foreigners net purchased 116 billion won in the KOSPI market and 63.3 billion won in the KOSDAQ market as of 9:40 a.m.

Historically, the stock market has shown strength after U.S. presidential elections. When Donald Trump was elected president in 2016, the KOSPI rose 19.86% in the six months following the election day. When Barack Obama was elected in 2008, it increased by 18.15%, and when George W. Bush was elected in 2000, it rose 9.69%. The resolution of uncertainties and expectations for future policies after elections appear to have a positive effect on the stock market. This time as well, it is interpreted that these factors are contributing to the market's strength.

Seojeonghun, a researcher at Samsung Securities, said, "Market participants are paying more attention to the clearer U.S. government structure compared to before rather than remaining negative factors," adding, "The severe wait-and-see stance observed during October has now shifted to active buying, and the previously significant uncertainty regarding the U.S. presidential election results has surfaced, making it possible to implement response strategies accordingly without difficulty."

Foreign buying momentum is also expected to continue. Researcher Seo added, "The previously lukewarm movements of foreigners are gaining momentum," and "Given the conditions that could further strengthen foreign buying, such as the won's appreciation, attention should be paid to large-cap, economically sensitive value stocks favored by foreigners."

However, short-term volatility-inducing factors remain, such as President Trump's refusal to concede the election, the prolonged COVID-19 pandemic, and the continued surge in cases. Lee Kyungmin, a researcher at Daishin Securities, explained, "Since the global stock market has reacted sensitively depending on the U.S. presidential election and congressional composition, election issues have been largely priced into the stock market," adding, "Considering that relief, expectations, and psychological reversals have largely unfolded, calmness is needed from now on."

High valuation is also a negative factor for the stock market. Seo Sangyoung, a researcher at Kiwoom Securities, said, "Concerns and expectations regarding Biden's first administration personnel remain, and especially considering the high valuation, if some personnel outcomes act as negative factors, increased volatility in the index is inevitable," adding, "Rather than actively responding to the market, it seems advisable to focus on some thematic stocks and sectors where foreign demand is concentrated for the time being."

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