Investment Strategies After the Presidential Election: Focus on Holding, Securities, and Construction Stocks

Domestic Economy Mirrors 2017 Presidential Election
Financial Sector Led in Returns at the Time

With the conclusion of the early presidential election that has determined the 21st president, market attention is turning to sectors expected to benefit. Experts analyze that, as was the case following the 2017 presidential election, the financial sector, which is closely linked to the domestic economy, is likely to see an upward trend.

On June 4, KB Securities recommended focusing on holding companies, financial (securities), and construction stocks, which are expected to benefit from domestic demand stimulation or amendments to the Commercial Act. The company explained that the election of a president can provide a short-term momentum for the stock market by reducing uncertainty.

Lee Jae-myung, the Democratic Party presidential candidate who is certain to be elected as the 21st president, is entering the central party office in Yeouido, Seoul, on June 4, 2025, to thank the campaign committee chairs. Photo by Kim Hyunmin

Kim Dongwon, Head of Research at KB Securities, stated, "Although the global macro environment in 2017 and now is quite different, the domestic economic conditions are very similar. After the presidential election at that time, the KOSPI rose by about 10% over three months, and the financial sector (construction > banks > insurance), which is closely tied to the domestic economy, recorded the highest returns."

Among these, holding companies are considered the primary beneficiaries of amendments to the Commercial Act. This is due to President Lee Jaemyung's plan to pursue amendments that would clearly define directors' fiduciary duties to shareholders and institutionalize the principle of mandatory cancellation of treasury shares by listed companies. Lee Euntaek, a researcher at KB Securities, noted, "However, since each company has completely different businesses and governance structures, it is a more practical strategy to select individual stocks within the holding company sector rather than targeting the entire sector." He named LS and CJ as his top picks among holding companies.

As discussions on capital market structural reform spread, securities stocks are also benefiting. Lee added, "With the number of stock investors reaching 14 million, the emergence of capital market-related policies such as governance reform is expected to provide an opportunity for a revaluation of the Korean stock market." He selected Korea Financial Group and Samsung Securities as the top picks in the securities sector.

Construction stocks, which reflect expectations for economic stimulus, also deserve attention. This is because real estate is the area that is most quickly reflecting expectations for a bottom in domestic demand. Lee explained, "Rising real estate prices can strengthen the perception that the construction industry has hit bottom. Construction is also a sector that can benefit from issues such as nuclear power, inter-Korean policies, and the end of the Russia-Ukraine war." Hyundai Engineering & Construction and Samsung C&T were selected as the top picks in the construction sector.