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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
31-01-2025
- Business
- Korea Herald
Seoul shares dip on DeepSeek shock; won at 2-week low
South Korean stocks ended lower Friday after a weeklong holiday as tech shares sharply slid in the aftermath of a recent shock from the emergence of Chinese artificial intelligence startup DeepSeek. The Korean won was trading sharply lower against the US dollar. The benchmark Korea Composite Stock Price Index dropped 19.43 points, or 0.77 percent, to close at 2,517.37. The Kospi was closed from Monday to Thursday due to the Lunar New Year holiday. Trade volume was moderate at 443 million shares worth 13.3 trillion won ($9.14 billion), with losers outnumbering winners 560 to 333. Foreigners dumped 1.2 trillion won worth of local shares, while retail investors and institutions purchased a combined 1.16 trillion won. "The Kospi saw volatility in its shares related to semiconductors and electronics due to the DeepSeek shock that hit the global stock markets during the Lunar New Year holiday," Lee Kyoung-min, an analyst at Daishin Securities, said. "DeepSeek's AI model, which is cheaper and more efficient than ChatGPT and other AI models from US tech giants, has raised concerns investment will slow down into advanced chips, data centers and electric facilities," he added. Earlier this week, the cost-efficient AI models from China's DeepSeek rattled global stock markets, with some experts arguing the Chinese AI model can compete against those from US tech giants at lower costs. Major US indexes, however, gained ground overnight as investors moved to buy up tech shares following a slide sparked by DeepSeek and data indicating the world's largest economy is still strong. In Seoul, market behemoth Samsung Electronics dipped 2.42 percent to 52,400 won, and its chipmaking rival SK hynix shot down 9.86 percent to 199,200 won. Major bio firm Samsung Biologics declined 0.55 percent to 1.08 million won, and aerospace and defense firm Hanwha Aerospace plunged 2.79 percent to 400,000 won. But IT and software shares were bullish as the recent DeepSeek shock indicated developing advanced AI models may not require massive computational resources, such as AI chips. Internet portal operator Naver jumped 6.13 percent to 216,500 won, and Kakao, the operator of the country's top mobile messenger, soared 7.27 percent to 38,350 won. Financial shares also gained ground, with KB Financial up 3.15 percent to 91,700 won, Shinhan Financial up 2.2 percent to 51,100 won and Meritz Financial climbing 4.48 percent to 114,200 won. Construction and trading firm Samsung C&T also surged 4.26 percent to 119,900 won, and Samsung Fire & Marine Insurance shot up 11.71 percent to 381,500 won. Krafton, the operator of the globally popular game PUBG: Battlegrounds, soared 6.12 percent to 364,000 won. The local currency was trading at 1,452.7 won against the greenback at 3:30 p.m., sharply down 21.4 won from the previous session, the lowest since Jan. 17. (Yonhap)
