South Korea's Kospi Index Surges 2% Post-Election, Won Appreciates 0.3%

South Korea's stock market and currency strengthened following the election victory of Lee Jae-myung, who won the presidential election and ended months of political uncertainty. The Kospi index, South Korea's benchmark stock index, rose by 2% on Wednesday, while the Korean won appreciated by 0.3% against the US dollar. This surge in the stock market and currency comes as the Kospi index has risen by 20% from its April low, positioning it to enter a bull market.

The election results have removed a significant source of uncertainty for the local market, which had been grappling with the political vacuum left by the impeachment of Yoon Suk-yeol, who briefly imposed martial law last year. Market attention has now shifted to Lee Jae-myung's policies aimed at boosting economic growth, with a focus on increasing government spending, improving corporate governance, strengthening labor protections, and concluding ongoing tariff negotiations and currency consultations with the Trump administration. The South Korean economy contracted in the first quarter, showing signs of weakness even before Trump announced tariff increases in early April.

Despite facing political uncertainty and sluggish economic growth, South Korea's stock market and currency have shown resilience this year, outperforming most of their Asian peers. Since April, when Yoon Suk-yeol was ousted, the Korean won has been one of the best-performing currencies in Asia, finding support from global investors seeking more certainty.

“Clearly, South Korea is eager to move past this chapter, and global investors are looking for more certainty,” said Massimiliano Bondurri, founder and CEO of SGMC Capital. “That's why we've seen a strong rebound so far. We believe this momentum could continue.”

From the start of the year until the election, the Kospi index rose by approximately 12%, reflecting investors' active search for investment value after the stock market fell into a bear market earlier this year due to concerns over US tariffs. The industrial and energy sectors, including nuclear stocks, shipbuilding stocks, and defense exporters, further boosted the index. Financial stocks also contributed to the Kospi index's pre-election rise as investors bet on the success of the candidates' promised corporate reform policies.