By Kim Tae-gyu
Staff Reporter
Stock prices surged across the world Wednesday on hopes that President-elect Barack Obama of the Democratic Party will lead the United States out of its financial crisis.
The Korean bourses were not exceptions to the election day rally, as both the benchmark KOSPI and the junior Kosdaq jumped more than 1.5 percent from the previous day’s closes.
The question is whether or not the new president will continue to positively affect the Korean economy and stock markets down the road.
Most experts here said that the election of Obama would better serve local share prices than his Republican competitor, Arizona Senator John McCain would have.
And yet, they are split over how large the "Obama Effect" will be ― or how big a lift Korean shares will experience and how long it will last.
``First of all, the victory of Obama cleared away uncertainties that weighed on the global economy,’’ said Lee Sun-yup, an economist at Goodmorning Shinhan Securities.
``Obama will be able to work with the full-fledged support of the Senate and the House, which Democrats control. This is good news for both the U.S. and Korean economies,’’ he said.
Obama defeated McCain to become the first black president of the United States. Democrats also scored major victories in the upper and lower parliaments.
Kim Seong-bong, an analyst at Samsung Securities, concurred.
``Traditionally, Democrats have employed a strong-dollar policy. This will help our firms export more products overseas. In this sense, the Obama effect will be substantial,’’ Kim said.
By contrast, some claimed the novelty value of the new president would be limited.
``I also think that Obama will be better than McCain in terms of boosting the Korean stock market. But the effect will not be that dramatic because there’s bad news as well,’’ Citigroup analyst Oh Suk-tae said.
``Obama may adopt protectionist policies against Korea. Nuclear problems involving North Korea may hit a snag due to the lack of cooperation between the rightist Korean government and the leftist Democrats,’’ he said.
The Lee Myung-bak administration is closer to Republicans than Democrats in its policy toward North Korea, as they share a hawkish stance against the Stalinist country.
Although the overall strength of the Obama Effect is in dispute, it is quite certain which Korean stocks will be affected by the President elect’s victory in the short term.
Manufacturers of wind power and solar power parts have seen a steep rise in their share prices over the past few days even before the triumph of Obama, who pledged big spending on green energy.
The 47-year-old senator from Illinois promised to invest up to $150 billion over the next decade in affordable, renewable sources of energy such as wind power and solar power.
Included in the Korean beneficiaries are Yonghyun Base Materials, Taewoong, PSM and DC Chemical. In particular, the share price of Yonghyun doubled over the past five trading sessions.
``The biggest buyer of renewable energy is the U.S. Hence, the $150 billion expenditure plan is expected to raise the bottom line of our component producers in the industry,’’ said Han Byung-hwa, an analyst at Hyundai Securities.
Along the same lines, automobile companies are projected to suffer from jitters because the business will face more regulations under an Obama presidency.
While hoping to substantially reduce carbon dioxide emissions, the 44th president of the U.S. vowed to phase in more fuel-efficient cars.