[Yoon Seok-yeol Impeachment] Uncertainty Resolved by Impeachment Acceptance... Stock Market and Exchange Rate Stability Expected

Uncertainties from Mutual Tariffs and Impeachment Ruling Reach Peak
Political Theme Stocks Expected to Surge Ahead of Early Presidential Election
Won-Dollar Exchange Rate Eyes Short-term Bottom at 1,430 Won

With the dismissal of President Yoon Suk-yeol, the political uncertainty that had been suppressing the stock market is expected to gradually ease. Along with the stabilization of the weak won and a shift to net buying by foreign investors, an upward trend in the stock market is anticipated.

As of 11:25 a.m. on the 4th, the KOSPI stood at 2470.34, down 16.36 points (0.66%) from the previous day. The KOSDAQ was up 4.33 points (0.63%) at 687.82. The KOSPI started with a drop of over 1%, then managed to turn upward as the Constitutional Court's ruling approached, but fell again after the ruling. The KOSDAQ started nearly 1% down but succeeded in rebounding.

On the same day, the won-dollar exchange rate opened at 1450.5 won, down 16.5 won from the previous trading day in the Seoul foreign exchange market.

Stock Market Rebound Expected as Uncertainty Eases

The domestic stock market, which had been shaken by U.S. mutual tariffs, has laid the groundwork for a rebound with the Constitutional Court's impeachment approval. Lee Kyung-min, a researcher at Daishin Securities, said, "With the impeachment phase ending and an early presidential election decided, a relative strength of the KOSPI similar to 2017 is expected," adding, "Back then, the KOSPI leveled up, and with regime change and expectations for economic stimulus policies, relative strength against the S&P 500 continued for nearly six months." He further noted, "As the won-dollar exchange rate, which is more sensitive to political risks, stabilizes, it is expected to be a favorable factor for foreign investor demand."

However, Byun Jun-ho, a researcher at IBK Investment & Securities, explained, "In past impeachment issue phases, the stock market ultimately reflected domestic and international economic trends rather than political risks."

Political theme stocks are expected to become more active until the early presidential election. According to the Public Official Election Act, if the president is dismissed, a presidential election must be held within 60 days after the dismissal. Accordingly, the 21st presidential election will be held before June 3.

Meanwhile, positive stock price trends are expected for domestic consumption stocks. Kang Jin-hyuk, a researcher at Shinhan Investment Corp., said, "Food and beverage stocks are closely related to political risks, but as the peak of domestic political uncertainty passes in the second quarter, a rebound in domestic consumption stocks due to recovery in consumer sentiment can be expected."

"Exchange Rate Decline with Removal of Uncertainty"…Attention on Speed to Reach Short-term Bottom of 1430 Won and 1410 Won

In the foreign exchange market, an appreciation of the won is expected as political uncertainty is resolved. Min Kyung-won, a researcher at Woori Bank, said, "The market is interpreting this impeachment approval as a resolution of political uncertainty," adding, "Attention should be paid to whether the 1430 won level will be breached downward in the short term."

Experts believe that if the exchange rate quickly falls to the 1410 won level, exporters and overseas investors alike may sell held dollars due to the psychological burden of 'it could fall further,' which could increase downside volatility. Conversely, if the rate does not quickly fall to the 1410 won level, it is expected to hover in the low 1400 won range.