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New Straits Times
2 days ago
- Business
- New Straits Times
South Korean shares rally on post-election stimulus, reform hopes
SEOUL: South Korean shares climbed on Wednesday to their highest levels in 10 months, as liberal presidential candidate Lee Jae-myung's election victory raised hopes of swift economic stimulus policies and market reforms. The benchmark KOSPI jumped 2.66 per cent to 2,770.84, posting its biggest daily gain in nearly two months and closing at the highest level since August 1, 2024. Lee officially took office as president on Wednesday, just hours after his victory in a snap election the previous day. His swift rise to power ends six months of political turmoil sparked by former President Yoon Suk Yeol's failed attempt to impose martial law in December - a move that stunned the country and rattled financial markets. "The inauguration of the new administration resolved political uncertainty," said Kang Jin-hyeok, an analyst at Shinhan Securities. "And, there are expectations that policy drives could be strong as Lee's Democratic Party holds a majority in parliament," Kang said. Foreign investors snapped up local shares worth 1.05 trillion won (US$766.60 million), marking their biggest single-day purchase since August 16, 2024. Lee has pledged to bring corporate reform measures to boost the domestic stock market, raise investment in artificial intelligence, and revive an economy reeling from slowing growth with stimulus policies. On capital markets, Lee has pledged to revive legislation within a few weeks to curb abuses by controlling shareholders of chaebol conglomerates, as part of his "KOSPI 5,000" pledge to double the value of the domestic stock market. The revision to the Commercial Act is seen by market analysts as a fundamental change needed to resolve the so-called "Korea Discount", a tendency for local shares to be undervalued compared with global peers due to low dividend payouts and opaque corporate governance. The securities sector was the top gainer, rising 8.1 per cent to its highest level since August 2009, while financial groups jumped 6.5 per cent to the highest point since May 2008. Analysts anticipate that these sectors will be among the biggest beneficiaries of ongoing market reform efforts. "We expect to see meaningful progress in capital market and governance reform post-election," Morgan Stanley's analysts said in a note, setting their KOSPI target for June 2026 at 2,800 for the base case and 3,100 for the bullish case. Renewable energy stocks rallied on expectations of a reversal in energy policy away from nuclear energy, with Hanwha Solutions climbing 5.7 per cent and OCI gaining 4.9 per cent, while the construction sector rose nearly 3 per cent on stimulus hopes. With President Lee signaling a more conciliatory approach toward North Korea and China, stocks linked to North Korea, such as In The F and Namkwang Engineering & Construction , as well as China-exposed sectors like beauty and entertainment, saw gains. Among major heavyweights, chipmaker SK Hynix gained 4.8 per cent, while rival Samsung Electronics rose 1.8 per cent, further buoyed by overnight gains among US peers. "A combination of aggressive industrial policies and expansionary fiscal policies could lead to faster economic growth, at least in the short term," said Kim Jin-wook, an economist at Citi. Lee announced plans to draft a second supplementary government budget of at least 30 trillion won to support the trade-reliant economy, which has been hit by US tariffs and is projected to grow by just 0.8 per cent this year. This follows a 13.8 trillion won supplementary budget passed in May. The won strengthened 0.55 per cent to 1,369.5 per dollar on the onshore settlement platform. The country's treasury bond yields rose, with the benchmark 10-year yield gaining 9.3 basis points to 2.894 per cent, the biggest jump since January 13.
Korea Herald
2 days ago
- Business
- Korea Herald
Kospi reclaims 2,700 intraday amid preelection momentum
South Korean stocks held firm Monday as anticipation of Tuesday's presidential election helped extend recent gains, with the benchmark Kospi reclaiming the 2,700 level during intraday trading on the final session before a new administration takes office. The Kospi opened strong at 2,709.92, nearly 10 points above Friday's close, and climbed to an early high of 2,719.87 within the first 20 minutes. The index remained above 2,700 through the morning before paring gains to end slightly higher at 2,698.97. While slightly weaker than last week's momentum, Monday's performance marked a continuation of the recent rally. The Kospi had broken above 2,700 last Wednesday for the first time in nine months, after months of trading between 2,400 and the mid-2,600s and stalling near 2,600 in May. Institutional investors weighed on the market, emerging as net sellers of roughly 241.5 billion won ($175.8 million). Foreign investors flipped the Kospi into positive territory late in the session, ramping up purchases to end as the day's biggest buyers with a net 125.1 billion won. Retail investors also helped support the index, adding 99 billion won in net purchases. The secondary Kosdaq showed a contrasting trend, climbing around 0.8 percent to close at 740.29. Unlike the Kospi, retail investors turned net sellers, offloading roughly 120 billion won, while foreign and institutional investors stepped in as net buyers, purchasing 111.7 billion won and 14.3 billion won, respectively. 'With the Kospi awaiting the outcome of Tuesday's presidential election, the market is heading into the holiday without a clear directional catalyst,' said Lee Jae-won, analyst at Shinhan Securities. Sector performance was mixed, with no clear trend across industries. Chipmakers such as Samsung Electronics and SK hynix posted modest gains, while Hyundai Heavy Industries and Hanwha Aerospace also stood out among heavyweight advancers. In contrast, financial stocks, which had rallied last week, surrendered part of their recent gains. Meanwhile, the Korean won weakened about 0.7 percent to trade near 1,374 won per US dollar as of 4 p.m. Monday. jwc@
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.
Korea Herald
4 days ago
- Business
- Korea Herald
Kospi reclaims 2,700 intraday amid preelection momentum
South Korean stocks held firm Monday as anticipation of Tuesday's presidential election helped extend recent gains, with the benchmark Kospi reclaiming the 2,700 level during intraday trading on the final session before a new administration takes office. The Kospi opened strong at 2,709.92, nearly 10 points above Friday's close, and climbed to an early high of 2,719.87 within the first 20 minutes. The index remained above 2,700 through the morning before paring gains to end slightly higher at 2,698.97. While slightly weaker than last week's momentum, Monday's performance marked a continuation of the recent rally. The Kospi had broken above 2,700 last Wednesday for the first time in nine months, after months of trading between 2,400 and the mid-2,600s and stalling near 2,600 in May. Institutional investors weighed on the market, emerging as net sellers of roughly 241.5 billion won ($175.8 million). Foreign investors flipped the Kospi into positive territory late in the session, ramping up purchases to end as the day's biggest buyers with a net 125.1 billion won. Retail investors also helped support the index, adding 99 billion won in net purchases. The secondary Kosdaq showed a contrasting trend, climbing around 0.8 percent to close at 740.29. Unlike the Kospi, retail investors turned net sellers, offloading roughly 120 billion won, while foreign and institutional investors stepped in as net buyers, purchasing 111.7 billion won and 14.3 billion won, respectively. 'With the Kospi awaiting the outcome of Tuesday's presidential election, the market is heading into the holiday without a clear directional catalyst,' said Lee Jae-won, analyst at Shinhan Securities. Sector performance was mixed, with no clear trend across industries. Chipmakers such as Samsung Electronics and SK hynix posted modest gains, while Hyundai Heavy Industries and Hanwha Aerospace also stood out among heavyweight advancers. In contrast, financial stocks, which had rallied last week, surrendered part of their recent gains. Meanwhile, the Korean won weakened about 0.7 percent to trade near 1,374 won per US dollar as of 4 p.m. Monday.
Korea Herald
17-04-2025
- Automotive
- Korea Herald
Seoul shares end nearly 1% higher on optimistic US-Japan tariff talks
South Korean stocks rose nearly 1 percent Thursday as investors became optimistic about the ongoing trade talks between the United States and Japan. The local currency rose against the US dollar. The benchmark Korea Composite Stock Price Index added 22.98 points, or 0.94 percent, to close at 2,470.41, rebounding from a 1.21 percent drop the previous day. Trade volume was moderate at 589.6 million shares worth 6.5 trillion won ($4.58 billion), with winners beating losers 638 to 225. Institutions purchased a net 346.2 billion won worth of stocks, while foreign and retail investors sold a net 351.9 billion won and 87.4 billion won, respectively. Overnight, US President Donald Trump said there was "big progress" in talks to strike a deal for Japan to avoid higher levies. The Washington-Tokyo trade talks are expected to give indications regarding upcoming negotiations with other allies, including South Korea. However, Wall Street closed sharply lower after Federal Reserve Chair Jerome Powell said higher-than-expected tariffs would lead to higher inflation and slower growth and remained pessimistic about a possible rate cut. Additionally, the Bank of Korea froze the key interest rate at 2.75 percent, citing concerns over fluctuating foreign exchange rates and rising household debts amid uncertainty from US tariff policies. "While Powell's comments weighed on the Korean market, investors were boosted by progress in tariff negotiations with Japan," said Lee Jae-won, an analyst at Shinhan Securities. In Seoul, semiconductor led the daily gain, overcoming the previous day's sharp drop following the recent US ban on exports of Nvidia's H20 chips to China. Samsung Electronics, the world's largest memory chipmaker, rose 0.73 percent to 55,100 won, and its chipmaking rival SK hynix climbed 0.57 percent to 175,000 won. Food companies and cosmetics makers were also strong. Food giant CJ Cheiljedang went up 2.53 percent to 243,500 won, and leading cosmetics brand AmorePacific jumped 3.77 percent to 115,700 won. Carmakers and battery companies finished mixed. Top carmaker Hyundai Motor stayed unchanged at 181,700 won, and its sister Kia advanced 0.35 percent to 85,000 won. Leading battery maker LG Energy Solution dropped 0.15 percent to 342,500 won, while Samsung SDI increased 2.2 percent to 180,900 won. The local currency was quoted at 1,418.9 won against the US dollar at 3:30 p.m., up 7.8 won from the previous session. (Yonhap)
