Yoon vs Lee, Who Should Be President for a Positive Stock Market Impact?

Democratic Party presidential candidate Lee Jae-myung and People Power Party presidential candidate Yoon Seok-youl attending a broadcast debate.
[Photo by Yonhap News]

[Asia Economy Reporter Kwon Jaehee] In the 20th presidential election, where capital market-related pledges poured out more than ever to win the votes of individual investors in their 20s and 30s, what impact will the presidential election have on our stock market? Looking at past cases, analysis shows that political orientation has not significantly affected the stock market.

Seungyoung Park, a researcher at Hanwha Investment & Securities, analyzed, "Only structural changes in the Korean economy are reflected in stock price fluctuations, and the political group in power does not seem to influence the stock market."

According to Hanwha Investment & Securities' analysis of KOSPI growth rates by past administrations, the highest KOSPI growth rate was during the Chun Doo-hwan administration, with a 345.8% increase. This was followed by the Roh Moo-hyun administration at 160%, Kim Dae-jung administration at 78.7%, Roh Tae-woo administration at 32.2%, Moon Jae-in administration at 20.9%, Park Geun-hye administration at 13.5%, Lee Myung-bak administration at 8.4%, and Kim Young-sam administration with a negative (-)40.1% growth rate, respectively.

Researcher Park stated, "The most significant variable affecting the Korean economy and stock market has been global trade conditions."

▲Yoon Seok-yeol, People Power Party Presidential Candidate [Image source=Yonhap News]

Former President Roh Tae-woo took office during the latter part of the three lows boom, and former President Kim Young-sam became president as the three lows boom ended. Former President Kim Dae-jung had no choice but to entrust the market with structural adjustments, and former President Roh Moo-hyun took office when the global free trade system and East Asian division of labor were at their peak. Former President Lee Myung-bak took office as the global free trade system began to unravel due to the financial crisis, former President Park Geun-hye had to accept low growth, and President Moon Jae-in was analyzed as having formed a big government.

Researcher Park said, "The most important variable is the trade policy of the United States, which accounts for 40% of exports," adding, "Since the establishment of the World Trade Organization (WTO) in 1995 and the stabilization of the global trade order in the mid-2000s, that period was the most favorable for global trade. However, since the financial crisis and the Donald Trump administration, trade conditions have begun to deteriorate and are unlikely to improve in the future."

▲Lee Jae-myung, Democratic Party presidential candidate [Image source=Yonhap News]

Although the political orientation of the ruling group does not affect the stock market, Hanwha Investment & Securities' analysis suggests that the direction of the economy and stock market can be gauged through the pledges presented by presidential candidates.

Researcher Park said, "Both ruling and opposition candidates have many pledges targeting the 20s and 30s, who have emerged as a casting vote in this election," adding, "These include support for startups directly linked to employment, housing supply for real estate stabilization, and protection and support for individual investors, which are the results of the Donghak Ant movement."

In an environment encouraging startups, the number of unicorn companies is expected to continue increasing. Additionally, the number of venture-origin companies among the top market capitalization is expected to rise, and the public offering market is also anticipated to maintain favorable conditions.

Researcher Park analyzed, "Companies will need to recognize and pay attention to the presence of individual investors going forward," adding, "Physical spin-off listings are expected to become more difficult, and shareholder returns will become increasingly important as a variable determining stock valuation."

Areas where opinions diverge between ruling and opposition candidates include energy, growth industries, and taxation. The energy sector is a domestic industry, and the election outcome is important due to the significant impact of policies.

The ruling party candidate plans to further strengthen investment in renewable energy, while the opposition candidate emphasizes the importance of nuclear power, so renewables and nuclear power are expected to fluctuate depending on the election results.

Researcher Park said, "Regarding new growth industries, candidate Lee Jae-myung intends to find growth engines in electric vehicles, gaming, virtual assets, and space, whereas candidate Yoon Seok-youl has announced plans to create a new industrial belt connecting Osong, Hochang Daedeok, and Iksan, which may bring attention to bio industries," adding, "However, new growth industries are unlikely to stand out in the stock market unless they align with global trends, so policy influence is expected to be less than in the energy sector."

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