[Asia Economy Reporter Kwon Jae-hee] As the announcement of the midterm election results, which will shape the future political landscape of the United States, approaches, investors' attention is focusing on the impact on the Korean stock market and the beneficiary industries. In particular, with forecasts that the Republican Party will have the upper hand in both the House and Senate, the possibility of amendments to the Inflation Reduction Act (IRA) has been raised, drawing keen interest in the direction of eco-friendly related stocks.
According to the financial investment industry on the 9th, there is speculation that the IRA bill, which the Biden administration has actively promoted, will be amended due to the Republican Party's expected dominance in this midterm election. Since the Republican Party has long mentioned revising the IRA bill, a slowdown in the IRA bill's progress is inevitable.
This election will select all 435 members of the U.S. House of Representatives, 35 senators, and governors of 36 states. Currently, the House is controlled by the Democratic Party, and the Senate is evenly split with 100 seats. If the Republican Party becomes the majority in both the House and Senate or secures a majority in either chamber, it is expected to balance the ruling party's policies.
With the Republican Party's anticipated dominance, the automobile and some secondary battery sectors have come under the influence of potential IRA bill revisions. The Republican Party's stance is that some electric vehicle materials and parts must be sourced externally to reduce the cost burden on domestic companies.
As a result, attention is gathering on automobile stocks such as Hyundai Motor and Kia, which have been directly hit by the IRA bill. The IRA includes provisions that subsidies are only granted to electric vehicles with a certain percentage or more of battery materials that are finally assembled and manufactured in North America, which has caused Korean automobile-related stocks to show weakness. However, if the Republican Party becomes the majority, amendments or a slowdown in the IRA bill are inevitable, raising expectations for a rebound momentum in automobile-related stocks. As of 9:38 AM on the 9th, Kia is trading at 67,600 KRW, up 0.15% from the previous trading day. Hyundai Motor is trading at 170,000 KRW, unchanged from the previous trading day.
On the other hand, if the Democratic Party prevails, eco-friendly related stocks, which have been sluggish, are expected to surge again. Although the automobile industry was hit by the IRA bill, eco-friendly sectors such as solar power have been classified as beneficiary industries. Hanwha Solutions and OCI are representative examples. As of 9:58 AM, Hanwha Solutions is trading at 48,450 KRW, up 2.86% from the previous trading day. At the same time, OCI is trading at 101,500 KRW, up 2.84% from the previous trading day.
Park Hye-ran, a researcher at Samsung Securities, analyzed, "If the Republican Party wins, the automobile sector will be a beneficiary industry, whereas eco-friendly related stocks such as solar and wind power face short-term price adjustment risks."
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