Lee Jae-myung’s Victory Signals Shift to Equity-Driven Growth in South Korea

Lee Jae-myung’s landslide victory in South Korea’s Democratic Party primary has cemented his position as the frontrunner for the June 3 presidential election. With 89.77% of the primary vote, his economic vision—centered on reducing inequality, fostering innovation in AI and renewable energy, and expanding welfare programs—could reshape South Korea’s economic landscape. For investors, his policies present both opportunities and risks tied to sectors aligned with his agenda.

Equity Through Innovation: Betting on AI and Green Energy
Lee’s core promise—“alleviate polarization and share opportunities and outcomes as fairly as possible”—relies heavily on new industries. He aims to transform South Korea’s economy from its traditional export-driven model, dominated by tech giants like Samsung and Hyundai, to one that integrates smaller businesses, startups, and sectors like AI and renewable energy.

The AI sector could see significant investment. South Korea’s tech giants, such as Samsung Electronics () and SK Hynix (SKM), already dominate global semiconductor markets, but Lee’s policies could accelerate R&D spending and attract startups. Meanwhile, renewable energy is a clear priority. The government plans to increase renewable energy capacity to 42% of the power mix by 2030—up from 8% in 2022—creating demand for companies like Samsung Renewable Energy and Hanwha Solutions.

Welfare Expansion: A Boost for Consumer Staples and Healthcare
Lee’s welfare initiatives, such as universal basic income (UBI) for youth and free postnatal care, have already been tested in his roles as mayor and governor. These programs could expand nationally, directly boosting consumption in sectors like healthcare and consumer staples.

However, critics argue that such programs risk fiscal strain. South Korea’s debt-to-GDP ratio stands at 52%, and Lee’s plans may require higher taxes on corporations or the wealthy. Investors in consumer goods (e.g., CJ CheilJedang) and healthcare (e.g., Samsung Biologics) should monitor how welfare spending translates into sustained demand.

Systemic Reforms: A Double-Edged Sword for Corporations
Lee’s pledge to rebalance growth away from large conglomerates (chaebols) and toward small businesses and service industries could disrupt traditional sectors. For instance, his push for fairer competition may pressure chaebols like Hyundai or LG to share markets with startups.

Yet, systemic reforms could also boost innovation. By reducing barriers for startups in AI and green tech, Lee might create a more dynamic economy. Conversely, his legal battles—five ongoing corruption trials—introduce political uncertainty. If elected, presidential immunity would halt these cases, but the cloud could deter foreign investment.

Conclusion: A High-Reward, High-Risk Play
Lee’s policies align with global trends toward ESG (environmental, social, governance) investing, offering tailwinds for tech and renewable energy firms. His 38% lead in Gallup polls suggests strong public support for his agenda, which could translate into legislative momentum. However, his legal vulnerabilities and the challenge of implementing sweeping reforms in a polarized society pose risks.

Investors should focus on sectors directly tied to his priorities:
1. Tech and AI: Companies with strong R&D pipelines, such as Samsung Electronics and SK Hynix.
2. Renewable Energy: Firms like Hanwha Solutions and LS Electric, benefiting from policy-driven demand.
3. Welfare-Driven Sectors: Consumer staples and healthcare stocks that stand to gain from increased spending.

While Lee’s vision could catalyze inclusive growth, the success of his policies hinges on navigating political and economic headwinds. For now, his primary win signals a clear shift toward equity-focused growth—a theme that could define South Korea’s investment landscape for years to come.