Korea's presidential election is expected to have limited influence on the country's stock market due to the protracted global economic slowdown, market watchers said Wednesday.
"Previous data shows the local stock market usually continues to grow for one year after a presidential election, and reach the peak in the second year," said Lee Da-seul, an analyst at Korea Investment & Securities Co.
The benchmark Korea Composite Stock Price Index (KOSPI) soared 29.7 percent on average in the first years of presidencies since former President Roh Tae-woo took office in 1988, sources said.
"Although the election is expected to have an adverse impact on conglomerates and retail businesses (due to candidates' campaign pledges to bolster growth of small and medium enterprises), shares related with welfare policies are expected to grow," said Cho Yong-hyun, an analyst at Hana Daetoo Securities Co.
However, market watchers said external factors are expected to have a greater effect on the local stock market next year, as global economic uncertainties such as the U.S. fiscal cliff and the eurozone financial crisis came as major drags to local shares.
The same was true for the incumbent Lee Myung-bak administration. The KOSPI plunged 30.6 percent in the first year as the global financial crisis weighed down the local market following the collapse of the U.S. investment giant Lehman Brothers in 2008.
"Consumer sentiment tends to improve for a short term after presidential elections on rising hope on a new government," said Choi Kwang-hyeok, an analyst at Etrade Korea Co., said.
"However, the local stock market will eventually be more affected by the global economy after short-term factors die down," Choi added.
Meanwhile, voting began for South Korea's presidential election Wednesday, with the outcome of the race between ruling Saenuri Party candidate Park Geun-hye and main opposition rival Moon Jae-in expected to be decided by the slimmest of margins.
The local financial markets are closed Wednesday, as presidential election day is a national holiday in Korea. (Yonhap)