By Kim Tae-gyu
Staff Reporter
As far as the Korean stock market is concerned, U.S. Democratic nominee Barack Obama appears to be favored against Republican John McCain in the presidential election slated for this week.
A majority of Korean analysts predicted Sunday that Obama would help local bourses perform much better than conservative McCain would do in terms of leadership and relations with North Korea.
This contrasts with conventional wisdom that the market-oriented Grand Old Party would be better at enhancing stock prices both in the U.S. and across the world.
``The ongoing financial woes are caused by the lack of proper leadership in the United States. Accordingly, the world needs solid stewardship there to tackle the financial storm,’’ said Lee Sun-yup, an economist at Goodmorning Shinhan Securities.
``In this sense, Obama would be a cut above since the Democratic Party is expected to win Senate and House voting due to take place on the same date as the presidential election,’’ Lee said.
Lee’s rationale: Only the Democrats will be able to carry out measures to take the world economy out of the current doldrums with the full support of the parliament.
He believes that Democrats will win the election. Subsequently, he thinks only a Democratic president will be able to lead the United States with the full help of the Senate and House, which will help the United States and Korea cope with the ongoing financial troubles.
Indeed, most U.S. journals and newspapers expect Democrats will take a majority at both the lower and upper parliaments.
``Plus, Republicans are responsible for today’s financial woes. So those who don’t have any obligations ― Democrats ― would better in tackling the problems,’’ Lee said.
Choi Seong-lak, an analyst at SK Securities, also prefers Obama for other reason to boost Korean stock prices.
``The Achilles’ heel for our stock market is the volatile relationship with North Korea. As Democrats have a knack of dealing with the North, I think their reign will better serve our stocks,’’ Choi said.
Among seven market analysts and economists surveyed Sunday by The Korea Times, four preferred Obama to better spur local stock markets while three were neutral including Kim Kyung-mo, an analyst at Mirae Asset.
``To be frank with you, people think it is time to change something. Their preference seems to be affected by such feeling. Who knows whether Obama or McCain will drive stock markets better?’’ Kim asked.
``They are thinking something new is necessary because stock markets have tumbled under Republicans. However, we don’t know whether things will improve under the reign of Democrats even if they win,’’ he said.
The stocks on the Korean bourses have suffered from free fall this year as shares in other countries.
The benchmark KOSPI, which stood higher than 2,000 last October, has once plunged to under 900 although it finished over 1,100 last Friday on news that Korea and the U.S. had signed a currency swap deal.
The U.S. Federal Reserve announced Thursday that it would sign a swap arrangement with the Bank of Korea to provide $30 billion in exchange for the Korean won.
The temporary contract, which will expire next April, is expected to help regain investor’s confidence on the Korean economy.