Written by Yeongil
Category: Politics · Investing · Asia
South Korea’s stock market surged after the election victory of Lee Jae-myung, who was sworn in as president following months of political uncertainty. The benchmark KOSPI rose 1.4%—its highest level in 10 months—as investors welcomed a return to political stability and potential economic reform.
This raises a familiar question seen around the world: Do presidential elections consistently boost stock markets? Let’s explore how Korea’s recent rally compares with patterns seen in the U.S. and Europe—and whether these post-election rallies are sustainable.
🇰🇷 South Korea: Relief Rally After Political Turmoil
Lee Jae-myung’s win ended a tumultuous political chapter following the impeachment of former President Yoon Suk-yeol. Investors interpreted the result as a shift toward stability and potentially pro-growth policies.
Foreign inflows increased as markets rallied on expectations of a stronger fiscal push and improved governance. The KOSPI’s rally was driven by sectors tied to exports, semiconductors, and financials.
🇺🇸 United States: Elections and Market Psychology
In the U.S., presidential elections often trigger short-term volatility, but historical data shows a post-election rally is common. Since 1950, the S&P 500 has posted an average return of 11.4% in the year following an election—driven by investor relief, policy optimism, and risk reallocation.
However, market performance typically hinges more on economic fundamentals and interest rates than the identity of the president.
🇪🇺 Europe: A Mixed Picture
In Europe, election results tend to have country-specific effects. For example, German equities rose 7% during a leadership transition, aided by export resilience and a weaker euro.
Meanwhile, in France or Italy, political instability often triggers caution among investors, especially when populist leaders gain power. Still, market reactions are typically muted compared to the U.S. or Korea.
📊 How Long Do Post-Election Rallies Last?
Election-related market rallies are often short-lived. After the initial excitement fades, markets reorient toward fundamentals: GDP growth, earnings expectations, monetary policy, and global conditions.
The sustainability of a post-election rally depends on the new administration’s ability to deliver policy clarity and stimulate growth without causing inflation or fiscal risks.
🔍 Final Take: Elections Can Spark Momentum—But Fundamentals Rule
Lee Jae-myung’s victory may have sparked a wave of optimism in Korea, but like in the U.S. or Europe, that sentiment must be backed by policy execution. Political change is a catalyst—but not a guarantee—for long-term gains.
Smart investors should enjoy the rally, but remain focused on underlying economic indicators and global market dynamics.
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