Attention is focusing on whether the “honeymoon rally” (the strong stock market in the early days of..

Attention is focusing on whether the “honeymoon rally” (the strong stock market in the early days of the regime) will continue as the KOSPI has changed its connection to the inauguration of President Lee Jae-myung, who declared the “KOSPI 5000 era.” There are rosy predictions that the index will show an upward trend in anticipation of the stock market stimulus measures and political uncertainties have been resolved.

According to the stock market on the 8th, the KOSPI closed at 2812.05 on the 5th, up 41.21 points (1.49%) from the previous day.

It is the first time in 11 months that the index has exceeded the 2,800 mark during the day since July 19 (2802.68p) last year. The KOSPI rose 2.66% on the 4th when President Lee took office, followed by two consecutive days of strength, setting a new year high.

The domestic stock market is believed to have gained momentum on expectations of the new government’s policy to boost the stock market. President Lee’s key pledges include a revision to the Commercial Act, easing dividend income tax, and institutionalizing treasury stock retirement.

In particular, the Democratic Party of Korea reissued the amendment to the Commercial Law, which was canceled due to the exercise of the Yoon Suk Yeol government’s right to demand reconsideration (rejection) on the 5th, adding to expectations for the “Cospy 5000 era.” The revision includes expanding the targets of directors’ duty of loyalty to shareholders as well as the company, gradually expanding the separate election of audit committee members, making electronic voting mandatory at shareholders’ meetings and activating a concentrated voting system.

The opaque corporate governance structure has been pointed out as one of the main causes of the “Korea Discount” (undervaluation of the Korean stock market). Analysts say that the improvement of governance through the revision of the commercial law will serve as a re-evaluation factor for stock prices such as holding companies and financial companies.

The stock market predicted that the KOSPI trend will be upward in the future as the fall of the exchange rate, along with the new government’s policy expectations, acts favorably on foreign supply and demand.

Shin Min-seop, a researcher at DS Investment & Securities, said, “The KOSPI is expected to continue its good trend for the time being based on foreign supply and demand,” adding, “As stock prices have soared recently, there is a possibility of short-term profit-taking sales, but it is necessary to recognize this as an opportunity to buy at a low price.”

In addition, as most of the domestic stock markets have been on the rise since the presidential election, the prevailing view is that the trend will be good again this time.

According to a report recently published by Heungkuk Securities, the stock market’s response before and after the nine presidential elections since the revival of the direct election in 1987 was generally positive. A month after the presidential election, the KOSPI rose an average of 4.7 percent, and an average of 15.4 percent a year later.

The highest stock price increase in the first year was in 1987, when former President Roh Tae-woo was elected, with a 91% increase. On the other hand, the first one-year yield was sluggish during the presidents of Lee Myung Bak (-36.6 percent), Park Geun Hye (-0.9 percent), and Yoon Suk Yeol (-7.8 percent).

Lee Seung-woo, a researcher at Eugene Investment & Securities, said, “The stock market atmosphere is expected to be favorable after the presidential election. Interest in the securities and renewable energy industries, which show the biggest difference from the previous government, is valid.”