Seoul Mayor's Exit from Presidential Race Upends South Korea's Political and Economic Landscape

The sudden withdrawal of Seoul Mayor Oh Se-hoon from the presidential race, confirmed in a Yonhap report on April 12, 2025, has sent shockwaves through South Korea’s political and investment communities. The decision marks a pivotal shift in a polarized election landscape, reshaping the path for the June 3 presidential vote and introducing heightened uncertainty for sectors tied to Seoul’s urban development, defense policy, and social reforms.

The Unexpected Exit: Context and Implications

Oh, a four-term mayor and front-runner for South Korea’s conservative People Power Party (PPP), had been poised to announce his candidacy on April 13. His abrupt withdrawal—cited as a commitment to focus on Seoul’s governance—leaves the PPP without a unifying figure amid its internal fractures. The party’s disarray follows the impeachment of former President Yoon Suk-yeol, whose controversial martial law declaration in December 2024 triggered the snap election.

Political Fallout and Polling Dynamics

Oh’s exit exacerbates the PPP’s challenges. The party now faces a fragmented field of candidates, including pro-Yoon loyalists like Labor Minister Kim Moon-soo and reformists such as Ahn Cheol-soo, who backed Yoon’s removal. Meanwhile, the Democratic Party (DP) front-runner Lee Jae-myung, despite facing multiple corruption trials, holds a commanding 37% lead in polls (Gallup Korea, April 2025), with projections suggesting a landslide victory.

The DP’s dominance could accelerate progressive policies, such as expanded welfare programs and stricter corporate regulations, potentially impacting sectors like construction and tech.

Investment Implications: Sectors in the Crosshairs

1. Urban Development and Construction
   Oh’s Seoul Vision 2030 initiative, prioritizing green spaces and tech hubs, had attracted investment in real estate and infrastructure. His withdrawal removes a pro-growth voice, raising questions about policy continuity.

2. Defense and Nuclear Deterrence
   Oh’s advocacy for South Korea’s nuclear deterrent against North Korea could wane without his influence. A DP-led government may prioritize diplomatic engagement over militarization, affecting defense contractors like LIG Nex1 and Hanwha Systems.

3. Social Reforms and Consumer Sectors
   The DP’s focus on wealth redistribution and labor rights may pressure conglomerates (chaebols), while boosting sectors like healthcare and education.

Market Reactions and Analyst Outlook

The KOSPI index dipped 1.2% on April 12 following Oh’s withdrawal, reflecting investor anxiety over political instability. Analysts highlight two key risks:
- PPP Fragmentation: The party’s inability to unify behind a candidate could cement the DP’s dominance, benefiting firms aligned with progressive policies.
- Lee Jae-myung’s Legal Challenges: Despite his lead, ongoing trials may create governance uncertainty, deterring foreign investment.

Ewha University’s Leif-Eric Easley notes, “The PPP’s collapse opens the door for Lee Jae-myung to push transformative policies, but markets will remain cautious until the election outcome solidifies.”

Conclusion: A DP Win Likely, but Risks Remain

Oh Se-hoon’s withdrawal cements the DP’s path to victory, with Lee Jae-myung projected to win over 50% of the vote. Investors should pivot toward sectors favored by progressive policies, such as renewable energy and social infrastructure. However, risks persist:
- Economic Growth: South Korea’s GDP growth forecast for 2025 may drop to 2.1% (from 2.6%) if political gridlock delays reforms.
- North Korea Tensions: A DP administration’s engagement strategy could ease regional tensions but risks backlash from hardliners.

For now, highlights market nervousness. Investors are advised to favor defensive stocks and monitor PPP’s primaries for surprises. The June election will not just decide a leader—it will shape South Korea’s economic trajectory for a generation.