Korean Stock Market Amid Political Uncertainty, Is Recovery Possible? [AK Radio]

Recently, the South Korean financial market has been drawing attention amid political uncertainties such as the declaration of martial law and the passage of the impeachment motion against President Yoon Seok-yeol. Compared to past presidential impeachment cases, the current stock market shock appears to be less severe than expected. Securities industry experts suggest that while the domestic stock market may experience short-term volatility, there is a high possibility of recovery in the mid to long term.

Following the impeachment political turmoil, the Korean stock market experienced a shock within an anticipated range. On the first trading day after the impeachment motion was passed, the market opened higher but turned downward by the close, and weakness continued thereafter. However, expectations that the impeachment turmoil will not be prolonged and confidence in the fundamental strength of the Korean economy have positively influenced the market. In particular, since early December, the government and the Bank of Korea have announced swift measures to stabilize the market, leading to evaluations that the stock market is gradually showing signs of recovery.

Little Impact During Past Two Impeachments

Looking at past cases, during the impeachment of former President Roh Moo-hyun, the financial market initially suffered a shock but entered a recovery phase after the Constitutional Court dismissed the impeachment motion. During former President Park Geun-hye’s impeachment, the market shock was not significant, and the stock market actually showed an upward trend after her removal. This was supported by positive factors in the global economy at the time, especially the semiconductor supercycle.

The main variable facing the Korean stock market in the current impeachment situation is the global economic trend. Experts assess that unlike in the past, the Korean stock market is currently confronted with multiple challenges. Additionally, the won-dollar exchange rate remains at a high level, negatively impacting the market as foreign investors withdraw from the domestic stock market.

Many Forecasts for KOSPI to Reach 2600 by Year-End

Despite these adverse factors, the securities industry offers a positive outlook for the mid to long term. Major domestic securities firms expect the Korean stock market to attempt to recover the KOSPI 2600 level by the end of the year. In particular, sectors such as semiconductors, automobiles, and defense are regarded as promising industries with high potential for earnings improvement, attracting investor interest. Of course, some experts caution that the market may still remain in a trading range and advise continuous monitoring of the impact of global economic trends.

Besides market indicators like exchange rates and interest rates, external factors such as U.S. interest rate policies and China’s economic stimulus measures are also considered crucial in determining the stock market’s direction. Especially, close attention should be paid to the pace of U.S. interest rate cuts, and despite China’s government declaring a 5% growth target for next year, the sluggishness of China’s domestic demand remains a point to watch.