"If Lee Jae-myung Wins, Positive Impact on Korean Stock Market" ... Foreign Securities Firm Report Draws Attention

Lee Jae-myung, the Democratic Party of Korea's presidential pre-candidate and governor of Gyeonggi Province, is answering questions from the press after visiting a single mother facility in Nam-gu, Gwangju, on the morning of the 18th.
[Photo by Yonhap News]

[Asia Economy Reporter Seoyoung Kwon] A report by a foreign securities firm analyzing the impact of the presidential election scenario of Lee Jae-myung, the Democratic Party's presidential candidate and Governor of Gyeonggi Province, on the Korean stock market has recently attracted attention.

Paul Choi, Head of Research Center at CLSA Seoul Branch, a Hong Kong-based securities firm, and others released a report titled "Jae-myung who?" on the 7th. The report stated, "Governor Lee is considered a 'populist' as he supports universal basic income and expanded welfare spending," and explained, "Looking back at his political trajectory, he has consistently advocated for an expanded government role to reduce inequality."

It also added, "If the probability of Governor Lee winning the presidential election on March 9 next year increases, contrary to many expectations, it could have a positive impact on the market economy." The analysis suggests that the economic policies pursued by Governor Lee would supply significant liquidity to the market, thereby extending the 'liquidity-driven market' trend. CLSA described this as a 'short-term steroid effect.'

However, the report also evaluated that "Governor Lee's policies will incur considerable costs in the long term." This is due to the possibility that he might attempt 'monetization of debt.' Monetization of debt refers to a policy where the government issues bonds to increase fiscal spending, and the Bank of Korea directly purchases these bonds.

Previously, on September 6 last year, Governor Lee wrote on his Facebook, "I fully agree with Professor Choi Bae-geun of Konkuk University, who argues that increasing household income through state household transfer income support to reduce debt and financing the resources with zero-interest perpetual bonds is the way to go." Professor Choi had posted on his Facebook the day before Governor Lee's post, suggesting, "The government should issue Korean won-denominated bonds with maturities of 30 to 50 years at 0% interest, and the Bank of Korea should underwrite them."

Meanwhile, CLSA's report also predicted that "Governor Lee will continue the Moon Jae-in administration's diplomatic policies, including a favorable stance toward communist countries such as North Korea."

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