[Asia Economy Reporter Minji Lee] With Democratic candidate Joe Biden confirmed as the winner of the U.S. presidential election, the domestic stock market is expected to continue its year-end rally. This is based on the judgment that political uncertainty is easing and export conditions are likely to improve in the future.
According to the financial investment industry on the 8th, the KOSPI is showing an upward trend as uncertainty over the U.S. presidential election has been removed. Throughout October, the KOSPI, along with the New York Stock Exchange, showed sluggish performance due to uncertainty about the U.S. election, but as Biden's victory became likely, it rose about 2.4% in a single day on the 5th. In the New York market, the three major indices closed with a sharp increase of over 2-3% on the 4th (local time).
Jung-hwan Na, a researcher at DS Investment & Securities, said, “The uncertainty caused by the election has been resolved, and the delayed economic stimulus package can now be implemented.” He added, “Since the primary goal of the U.S. government is to revive the economy depressed by the novel coronavirus disease (COVID-19), an economic stimulus package is expected.”
For South Korea, an export-oriented country, the improvement in trade conditions that had been a hindrance is expected to have a direct impact on the stock market. Even if U.S. protectionism continues, Biden is expected to emphasize cooperation with allied countries, which could reduce conflicts such as tariff wars under the Trump administration.
Sang-jae Lee, a researcher at Eugene Investment & Securities, forecasted, “If the Biden era becomes a reality, the Korean economy is expected to experience the most positive effects among emerging markets.” He added, “Korean exports are elastic to global trade volume, and the trade value chain connecting Korea, China, and the U.S. could be restored.”
Accordingly, expectations for a year-end rally are emerging. If Biden wins, the market anticipates a focus on green new deal stocks such as renewable energy and electric vehicles, as well as a favorable environment for the healthcare sector due to policies like the maintenance and expansion of Obamacare. Previously, Biden announced a $2 trillion green infrastructure investment as part of his campaign pledges. With the Republican Party controlling the Senate, concerns about increased taxes and regulations on companies under a Biden administration are expected to ease.
A variable remains in the lawsuits filed by the Trump camp. President Trump plans to challenge the mail-in ballot results and take the case to the Supreme Court. Hyun-hyang Ha, a researcher at Shinhan Investment Corp., said, “Trump does not acknowledge Biden’s victory, so, like the 2000 U.S. presidential election, the result may not be finalized until the Supreme Court makes a decision.” She added, “In the short term, how the year-end stimulus package is executed will emerge as a key variable.”
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