South Korea recently elected Lee Jae-myung as its new president, marking the beginning of a new political and economic chapter. While the global spotlight has focused on his background and social policy promises, investors—both local and international—are turning their attention to one key question: what impact will his presidency have on the Korean stock markets, particularly KOSPI and KOSDAQ?
In this post, we’ll take a look at how the Korean financial markets may evolve under President Lee, what corporate law changes are being proposed, and how foreign investors can prepare for possible market shifts.
A Quick Overview of KOSPI and KOSDAQ
Before diving into predictions, it’s worth briefly explaining the two main stock markets in South Korea:
KOSPI (Korea Composite Stock Price Index): South Korea’s main stock index, listing large-cap blue-chip companies like Samsung Electronics, Hyundai Motor, and LG Energy Solution.
KOSDAQ: South Korea’s equivalent of NASDAQ, focused on tech startups and smaller growth companies.
These markets are heavily influenced by domestic policy, global economic trends, foreign capital flows, and public sentiment. A change in leadership—especially one with a different economic philosophy—can impact all of these variables.
President Lee Jae-myung’s Economic Stance
Lee Jae-myung comes into office with a progressive economic vision. He has voiced concerns over rising inequality, market monopolies by large conglomerates (chaebols), and lack of protections for retail and minority investors.
Key economic goals of his presidency include:
Injecting government stimulus into the economy (₩30 trillion or around $22 billion USD)
Boosting household income
Supporting small businesses and young entrepreneurs
Reducing reliance on large corporations
Improving transparency and fairness in capital markets
For investors, one of the most talked-about areas is his proposed reform of South Korea’s Commercial Act, which governs corporate structure and shareholder rights.
What Is the Corporate Law Reform Proposal?
Lee has publicly supported amending the Commercial Act to:
Strengthen the fiduciary duties of corporate directors
Enhance the rights of minority shareholders
Limit abusive practices in mergers and acquisitions
Encourage companies to return more value to shareholders
Increase accountability for controlling family owners of chaebols
If passed, this reform could fundamentally reshape how South Korean companies operate and how they are valued in the market.
How Could the Reforms Impact KOSPI?
If Lee’s corporate reform plan becomes law, the KOSPI could experience several major changes:
Higher foreign investor interest: One of the long-standing issues in Korea is the “Korea Discount”—the tendency for Korean companies to trade at lower valuations than their global peers due to governance risks. If reforms improve transparency and shareholder rights, more global funds may flow into KOSPI-listed companies.
Improved corporate governance: Companies may be forced to increase dividends, buy back shares, or adopt independent board structures. These changes usually support stock prices.
Increased volatility in short term: Large conglomerates may resist reforms. Stock prices of companies closely tied to family control or weak governance structures could react negatively in the short term due to uncertainty or restructuring.
Long-term re-rating potential: Over time, if governance improves and trust builds, South Korean blue-chip stocks could receive higher price-to-earnings (P/E) multiples, lifting the overall index.
How Might KOSDAQ Respond?
KOSDAQ, being home to smaller and tech-oriented companies, is often more sensitive to policy shifts and market sentiment. Under Lee’s leadership:
More funding support for startups: Policies to support early-stage businesses and innovation could lead to growth in tech and biotech sectors.
Higher retail participation: Retail investors may feel more protected under the new administration, increasing activity in KOSDAQ-listed stocks.
Regulatory tightening on accounting and disclosure: While this may lead to temporary stress for some companies, long-term trust in KOSDAQ listings could improve.
In short, KOSDAQ could benefit from a “fairer rules” environment—but the path could be bumpy as new regulations are enforced.
What Could Go Wrong?
Of course, no reform is guaranteed to succeed. There are some risks to watch:
Political resistance: Even though Lee’s party has strong momentum, passing laws in South Korea’s National Assembly still requires broad support. Corporate lobbying against reforms could delay or dilute the changes.
Market overreaction: Sudden regulatory changes can sometimes spook investors, especially if communication is unclear. Foreign capital may pull out temporarily if uncertainty rises.
Implementation delays: Even after laws are passed, effective enforcement takes time. If reforms are only symbolic, market benefits may be limited.
Global Investor Sentiment So Far
Interestingly, since Lee’s election, both KOSPI and KOSDAQ have shown positive momentum. Part of this is relief that a constitutional crisis has ended, but another part is hope that the Korean market may become more trustworthy and investor-friendly.
According to early trading reports, sectors such as fintech, renewables, and consumer tech have seen increased activity, reflecting investor expectations of reform-led growth.
What Foreign Investors Should Watch Next
If you’re a global investor watching South Korea, here’s what to track over the next few months:
Legislative progress on the Commercial Act reform
Speeches or official proposals from Lee’s economic advisors
Responses from major conglomerates like Samsung and Hyundai
Net foreign inflow data in KOSPI and KOSDAQ
Corporate actions on governance—such as new board appointments or dividend policy changes
Additionally, it’s a good time to revisit ETFs or individual Korean stocks that have lagged due to governance concerns. If the reform goes through, these stocks may be re-rated upwards.