Stocks Fare Well 1st Year of New Gov’t
By Park Hyong-ki
Staff Reporter
Seoul stocks have performed fairly well every first year of a new government since 1993 and next year will be no exception, said Goodmorning Shinhan Securities.
Analyst Lee Sun-yup said when President Roh Moo-hyun took office in 2003 the stock market posted the strongest gains of 40.3 percent.
Former President Roh Tae-woo saw the stock market rise 39.6 percent in 1988, while the market gained 38.5 percent under the Kim Young-sam government in 1993.
The only exception was the year when former President Kim Dae-jung took office, the brokerage house said in a report. Kim saw Seoul stocks plunge 7.9 percent on average in 1998 as the country was going through a currency crisis. But after overcoming the crisis, the stock market handsomely gained 74 percent.
``The reason why the market performed well in most cases after the establishment of a new government is that uncertainties surrounding the presidential race were abated completely afterwards,'' said Lee.
He said that investor confidence is expected to get a boost this time around as well on expectations of steps to boost the economy by the new government.
Although the market may become bullish in the short-term, a new president's economic policies will affect the performance of the stock market going forward.
But the analyst said it all boils down to fundamentals and external factors that influence the stock market in the long-term.
``This is because the country depends on exports for growth, and it makes the market move in accordance with global markets,'' Lee said.
External factors such as U.S. subprime loan problems and rising oil prices are going to affect the stock market.
He said as an export-oriented economy, the market will be watching how the U.S. and China, the nation's two biggest export markets, will perform economically next year.