South Korean shares rally on post-election policy hopes

SEOUL: South Korean shares rose more than 2 per cent on Wednesday (Jun 4) to their highest 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 rose as much as 2.3 per cent in early trade to 2,761.54, the highest since Aug 1, 2024.

Lee began his term on Wednesday, just hours after his victory in Tuesday’s snap election, who has vowed to bring corporate reform measures to boost the domestic stock market, raise investment in artificial intelligence, and revive an economy reeling from slowing growth.

The securities sector was the top gainer, rising more than 6 per cent, while financial groups jumped more than 3 per cent. Analysts expect the sectors to gain most from market reform pushes.

On capital markets, Lee vowed 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.

“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. HD Hyundai Energy Solutions surged 12.5 per cent to the highest since March 2023, Hanwha Solutions climbed 6.4 per cent, Doosan Fuel Cell gained 5.7 per cent, and CS Wind added 4.9 per cent.