IPEF Launch Sparks Stock Market Optimism

[Asia Economy Reporter Junho Hwang] The outlook in the securities industry is divided over South Korea's participation in the Indo-Pacific Economic Framework (IPEF). While there are expectations of benefits in various sectors by joining the U.S.-led supply chain restructuring, some also view it as a new pressure on the domestic stock market, which is centered on export companies.

On the 3rd, Jaehyuk Han, a researcher at Hana Financial Investment, anticipated benefits in exports, supply chains, and energy sectors following the official launch of IPEF on the 23rd of last month. This includes export-related industries such as 5G (5th generation wireless communication) and steel, the Korean semiconductor sector aligned with the U.S.'s pressure on China, and the nuclear power sector, which has already been confirmed as a beneficiary following the recent South Korea-U.S. summit.

The renewable energy sector is also expected to experience a halo effect. Since nuclear power plants take a long time to develop new capacity, and with the 2030 carbon reduction targets and international pressure to expand renewable energy use, benefits are expected to flow to the renewable energy sector. Byunghwa Han, a researcher at Eugene Investment & Securities, explained, "Although the current government's policy centers on nuclear power, it inevitably has to pursue renewable energy expansion in a balanced manner. With pressures from overseas countries to expand renewable energy following RE100, carbon border adjustment taxes, and now joining IPEF, it will be difficult to resist these demands."

IPEF was launched under President Joe Biden's initiative to stabilize supply chains by bringing in allies while maintaining the framework to check China, similar to former U.S. President Donald Trump's stance. Inhwan Ha, a researcher at KB Securities, said, "Domestic companies are expanding investments in line with the U.S. moves, and government support will also become more active. Especially, support will be provided to advanced industries at the center of supply chain restructuring."

However, opportunities are expected to coexist with risks. The U.S.-led supply chain restructuring could lead to increased pressure from China. Da-eun Lee, a researcher at Daishin Securities, forecasted, "The deepening U.S.-China trade conflict and the resulting depreciation of the yuan are likely to lead to a weaker Korean won, which, combined with soaring raw material prices, could exert downward pressure on the stock market due to trade balance deficits."

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