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Korea Herald
3 days ago
- Business
- Korea Herald
Postelection momentum: Will new leadership lift Kospi past 2,800?
With policy clarity in sight, investors turn bullish — Kospi seen testing 3,000 After months of political limbo, South Korean capital markets are brimming with anticipation as Tuesday's presidential election ushers in new leadership and an end to a prolonged policy vacuum. While candidates differ in the specifics of their market-boosting pledges, they share common ground on one urgent issue: the need to resolve the persistent 'Korea discount' that has long weighed on valuations. Market watchers expect this shared resolve — alongside broader investor optimism — to fuel a postelection rebound, regardless of who takes office. Investor sentiment points to a gradual Kospi recovery, with the index likely to test 2,800 in the second half — a level not seen since July 2024. 'Expectations for economic stimulus are likely to strengthen after the election, and a shift from policy vacuum to active support could drive a stronger won and foreign buying,' said Daishin Securities analyst Lee Kyoung-min. However, Lee flagged a potential short-term pullback as the market digests preelection gains. The Kospi broke above 2,700 last week for the first time in nine months on hopes for political clarity. While forecasting a near-term trading band of 2,550 to 2,800, Lee reaffirmed his year-end target of 3,000 points, expressing confidence that improved fundamentals under the new administration could ultimately push the market to that level. Other brokerages have also raised their targets, with wider bands reflecting increased volatility. Korea Investment & Securities projects a 2,400–2,900 range, expecting third-quarter consolidation followed by a gradual fourth-quarter uptrend. NH Investment & Securities sees 2,350–3,000, while Shinhan Securities targets 2,550–2,780. Historical precedent supports the optimism. Eugene Investment's Huh Jae-hwan, analyzing nine presidential elections since 1981, found the Kospi gained after six. Huh noted that, on average, the index rose 3 to 4 percent in the first month and 14 to 16 percent over the year, typically driven more by easing political uncertainty than specific policy pledges. Analysts emphasized that the Kospi's sustained growth will hinge on foreign investor flows, particularly if the won continues to strengthen. 'A move above 2,600 will need renewed foreign inflows to maintain momentum,' said Noh Dong-kil of Shinhan Securities, calling foreign investment the key driver of a second-half rally. Foreign investors had been net sellers for nine straight months since August, offloading 15.4 trillion won ($11.2 billion). That sell-off dragged the Kospi from a near-2,900 peak last July to as low as 2,300. Sentiment rebounded in May as easing US tariff fears and signs of political clarity prompted foreign investors to buy 1.2 trillion won over the month, followed by an additional 240 billion won purchase Monday. The key driver, analysts say, is currency. 'Foreign inflows are closely tied to dollar moves,' said Kim Soo-yeon of Hanwha Investment & Securities, noting that foreigners typically turned to net buyers about a month before the won strengthened. After spending much of the year weaker than 2024 levels, and briefly approaching 1,500 won per dollar, the currency slipped to 1,369 won on May 26, its first dip below last year's mark. It has since stabilized in the high-1,300 range. Daishin's Lee expects further gains. 'Anticipation of stimulus and industrial policies should lift demand confidence and add upward pressure on the won,' he said, projecting the won to enter the low 1,300s against the greenback by the third quarter. Pro-market campaign pledges Still, much will depend on how swiftly the new administration delivers, with foreign inflows likely to stay cautious until it fills the policy vacuum left since December. Liberal candidate Lee Jae-myung of the Democratic Party of Korea has pledged to usher in a 'Kospi 5,000 era' by strengthening minority shareholder protections. He calls for overhauling the Commercial Act to improve corporate governance, proposing codified fiduciary duties, expanded cumulative voting and safeguards against spinoff listings. To bolster market integrity, Lee proposed to permanently ban those convicted of stock manipulation, along with stronger real-time surveillance and stricter clawback rules on short-swing profits. He also reaffirmed Korea's push for inclusion in Morgan Stanley Capital International's developed markets index. Conservative rival Kim Moon-soo of the People Power Party has largely echoed the previous administration's market-friendly stance, proposing dividend tax cuts and incentives for long-term investment. He called for stronger investor outreach through presidential road shows abroad and a financial policy council comprising regulators and private-sector experts. Kim supports limited governance reform through the Capital Markets Act, not the broader Commercial Act. His proposals target listed firms only, aiming to boost shareholder protection and board expertise, while easing inheritance tax burdens during business succession. Like Lee, he also backs tougher penalties for stock crimes, including life sentences and punitive damages. In the cryptocurrency space, the two candidates struck rare common ground. Both backed the launch of spot crypto exchange-traded funds — a key industry demand — while supporting the establishment of a regulatory framework for emerging digital assets such as stablecoins and security token offerings. Separately, Lee emphasized structural reform, including centralized oversight and lower transaction fees, while Kim leaned toward deregulation, backing institutional trading and the removal of the one-bank-per-exchange rule. Global headwinds may cloud optimism Risks remain, as uncertainty over global trade and Korea's weak growth outlook could temper capital markets' recovery. Korea's export-reliant economy remains exposed to US tariff hikes, with a bilateral deal expected in early July. Until then, outbound shipment prospects remain murky, adding pressure to an economy forecast to grow less than 1 percent this year. 'Trump is likely to continue tariff threats, currency talk and trade renegotiations while pushing tax cuts and deregulation,' said Na Jeong-hwan of NH Investment & Securities. Markets may grow numb to tariff headlines, he added, but US political risks could intensify into September. Still, with local markets significantly undervalued, Korea's domestic outlook offers room for optimism. 'As long as local markets follow US trends, expectations for fiscal and monetary stimulus under new leadership, coupled with structural reforms, should help lift the Kospi,' Na said.
Business Recorder
21-05-2025
- Automotive
- Business Recorder
South Korean shares end higher as pharma stocks jump on government's support pledge
SEOUL: Round-up of South Korean financial markets: South Korean shares closed nearly 1% higher on Wednesday, as biopharmaceutical stocks jumped on a government pledge of policy support to help mitigate the impact of US tariffs. The benchmark KOSPI closed up 0.91%, or 23.78 points, at 2,625.58. The pharmaceutical sector rose 4.54% and was the biggest gaining sub-index. Drugmaker Samsung Biologics advanced 7.11%, its biggest one-day percentage gain since July 2023, while peer Celltrion added 0.84%. South Korea pledged more support measures for key export industries, such as biopharmaceuticals and autos, as the sweeping US tariffs weigh on the trade-reliant economy. 'The government's plan to swiftly inject liquidity into the sectors, upon the announcement of US semiconductor and pharmaceutical tariffs, raised fiscal policy hopes and relief,' said Lee Kyoung-min, an analyst at Daishin Securities. During the first 20 days of this month, South Korea's exports fell 2.4%, as US-bound shipments dropped 14.6%, dragged down by autos, auto parts and steel products, data showed. Most other index heavyweights fell, including chipmaker Samsung Electronics and peer SK Hynix, which ended down 0.36% and 0.74%, respectively. Hyundai Motor dropped 0.79%, battery maker LG Energy Solution declined 0.72%, while steelmaker POSCO Holdings shed 0.21%. Of the total 936 traded issues, 540 shares advanced, while 335 declined. Foreigners were net buyers of shares worth 205.8 billion won ($148.45 million). The won was quoted at 1,387.2 per US dollar on the onshore settlement platform, 0.52% higher than its previous close at 1,394.4.
Business Recorder
12-05-2025
- Automotive
- Business Recorder
South Korean shares gain over 1% on US-China trade optimism
SEOUL: Round-up of South Korean financial markets: South Korean shares rose more than 1% on Monday, led by chip and auto makers on progress in trade talks between China and the United States. The benchmark KOSPI closed up 30.06 points, or 1.17%, at 2,607.33, its highest since March 26. The US and China ended high-stakes trade talks on a positive note on Sunday, with US officials touting a 'deal' to reduce the US trade deficit, while Chinese officials said the sides had reached 'important consensus' and agreed to launch another new economic dialogue forum. 'Risk appetite firmed on easing tensions between the United States and China, which had weighed on global stock markets,' said Lee Kyoung-min, an analyst at Daishin Securities. The US is scheduled to have a meeting with South Korea later this week on the sidelines of the Asia-Pacific Economic Cooperation (APEC) Trade Ministers' meeting. Among index heavyweights, chipmaker Samsung Electronics rose 5.11%, while peer SK Hynix gained 2.58%. Battery maker LG Energy Solution climbed 1.10%. Hyundai Motor and sister automaker Kia Corp were up 3.11% and 3.47%, respectively. Steelmaker POSCO Holdings added 1.74%. Drugmaker Samsung Biologics fell 4.71% and peer Celltrion dropped 3.92%, after US President Donald Trump said he would sign an executive order to cut prescription prices. Of the total 935 traded issues, 661 shares advanced, while 240 declined. Foreigners were net sellers of shares worth 7.5 billion won ($5.4 million). The won was quoted at 1,402.4 per dollar on the onshore settlement platform, 0.19% lower than its previous close at 1,399.8.
Korea Herald
10-04-2025
- Business
- Korea Herald
Seoul shares rally over 6% on US reciprocal tariff pause; Korean won soars
South Korean stocks rallied 6.6 percent Thursday as the US administration's temporary pause of reciprocal tariffs on South Korea improved market sentiment. The Korean won was trading sharply higher against the US dollar. The benchmark Korea Composite Stock Price Index soared 151.36 points, or 6.6 percent, to close at 2,445.06, sharply rebounding from the 17-month low the previous day. Shortly after the stock market opened, the bourse operator issued a sidecar order at 9:06 a.m., halting program purchasing for five minutes, after the Kospi 200 futures soared 5 percent for more than one minute. Trade volume was a bit heavy at 661 million shares worth 10.9 trillion won ($7.5 billion), with winners far outperforming losers 873 to 47. Foreigners and institutions purchased local shares worth 324.4 billion won and 676.2 billion won, respectively, while retail investors dumped a combined 1.07 trillion won. Overnight, Wall Street posted one of the best days since the global financial crisis in 2008, with the S&P 500 surging 9.5 percent, the Dow Jones Industrial Average soaring 7.87 percent and the tech-heavy Nasdaq composite skyrocketing 12.16 percent. The rally came after US President Donald Trump lowered new tariffs on South Korea and other trading partners to 10 percent in what he calls a pause that will last for 90 days. He said the decision was made considering they have reached out to US trade officials for negotiations and have not retaliated against the reciprocal tariffs. Meanwhile, Trump increased duties on China to 125 percent following Beijing's announcement of a plan to raise tariffs on US goods to 84 percent in a retaliatory move. "Concerns turned to relief after the Trump announced a 90-day pause of reciprocal tariffs for countries other than China," Lee Kyoung-min, an analyst at Daishin Securities, said. "Shares related to semiconductor, defense, electricity and mobile phone components, in particular, led the Kospi's sharp rebound," he added. In Seoul, market bellwether Samsung Electronics rose 6.42 percent to 56,400 won, while its chipmaking rival SK hynix shot up 11.03 percent to 183,200 won. Leading battery maker LG Energy Solution soared 11.31 percent to 349,500 won, tracking Tesla's jump overnight, and top automaker Hyundai Motor advanced 5.06 percent to 187,000 won. Major shipbuilders HD Hyundai Heavy and Hanwha Ocean went up 10.39 percent and 6.56 percent to 324,000 won and 73,100 won, respectively. Top container shipper HMM increased 8.03 percent to 19,110 won, and major defense firm Hanwha Aerospace climbed 7.09 percent to 740,000 won. Financial shares also sharply gained ground, with KB Financial jumping 7.05 percent to 75,900 won and Shinhan Financial rising 5.5 percent to 46,000 won. Kakao, the operator of the country's dominant mobile messenger, also gained 7.67 percent to 40,000 won. The local currency was quoted at 1,456.4 won against the greenback at 3:30 p.m., up 27.7 won from the previous session. (Yonhap)
Korea Herald
04-04-2025
- Business
- Korea Herald
Yoon Suk Yeol's ouster clears path for economic stimulus, but tariff fears linger
Fiscal support seems likely, but monetary easing may hinge on external shocks, inflation The Korean Constitutional Court's decision to uphold the impeachment of President Yoon Suk Yeol has alleviated some degree of political uncertainty while paving the way for stimulus measures designed to buoy domestic consumption, experts said on Friday. The past four months have seen Asia's fourth-largest economy embroiled in its worst political turmoil in decades, following Yoon's brief attempt to impose martial law last December, which further undermined domestic demand and exports. "The resolution of political uncertainty, coupled with strengthened monetary and fiscal policy initiatives, is anticipated to swiftly enhance consumer sentiment," said Lee Kyung-min, a strategist at Daishin Securities. The impending early presidential election, expected by early June, could also elevate voter expectations and accelerate discussions on a supplementary budget, he added. Despite the ruling removing a key risk factor, apprehension around the adverse effects of tariffs imposed by US President Donald Trump persists. "The Constitutional Court's decision presents short-term benefits for the economy, such as potential rate cuts and extra budget allocations to lift (gross domestic product). Yet, prolonged US tariff issues could sharply reduce GDP growth," commented Seo Sang-young, a strategist at Mirae Asset Securities. Seo highlighted that the universal 10 percent duty announced by Trump would dampen global cargo volume — a significant concern for export-reliant Korea. As US tariffs loom, the Bank of Korea is expected to lower its 2025 GDP forecast further, which was already downgraded to 1.5 percent in February from 1.9 percent in November. 'Although we see potential scope for negotiations to decline from a 25 percent US reciprocal tariff on Korea to a 10 percent baseline, considering the Trump administration's often transactional approach, the timing of the Korea-US trade deal could be delayed to the third quarter this year as Korea's new administration will likely be formed on June 4,' said Citi economist Kim Jin-wook. Analysts foresee additional fiscal measures following a proposed 10 trillion won ($7 billion) supplementary budget. The government has sought bipartisan support for the extra budget bill to support exporters and deal with the repercussions of the recent wildfires in southeastern Korea. 'With the Democratic Party already holding a majority of seats in parliament, we expect more progressive policies and an expansionary fiscal policy,' said Kang Min-joo, senior economist at ING. Some analysts believed that the Bank of Korea would pause its rate cut cycle in the April meeting to keep it unchanged at 2.75 percent. With the country's inflation unexpectedly rising to 2.1 percent year-on-year in March, the central bank faces some difficult decisions as inflation pressures collide with currency weakness and sluggish domestic demand. 'The stabilization of the Korean won and the delay in fiscal support will prompt the BOK to cut rates in May. But, if the US tariffs weigh on the Korean economy more than expected, the timing of the BOK's rate cut could be accelerated,' Kang said. Kang Seung-won, an analyst at NH Investment and Securities, also predicted a possible policy rate cut in May, though political turmoil might push the timing to the third quarter. "Given the anticipation of stagnant first-quarter GDP figures, the likelihood of a May rate cut remains elevated,' he said.
