Financial Market Overcomes Impeachment Uncertainties and Returns to Normal

The Korean financial market showed signs of recovery despite the astonishment over the Assembly’s decision to impeach the president.

The Korean stock market rallied on Monday, shrugging off the shock of the presidential impeachment. Most economic indexes, including the appreciation of the won against the dollar, also quickly returned to normal.

The Korean Composite Stock Price Index (KOSPI) gained 3.46 points today since Friday, the day of the decision to oust the president, closing at 852.26 and bringing back a rising trend in just seven trading sessions since March 5. The KOSDAQ also rose 4.98 points (1.18 percent) to finish at 425.26.

The surge in stock prices is attributed to individual and institutional investors who have taken part as active buyers.

Net selling of stocks by foreign investors only totaled 46.5 billion won, allaying the concern over rapid outflow of foreign capital.

The won, which depreciated in value on impeachment day, came back stronger on Monday.

The won-dollar ratio fell 5.5 to 1175.3 on the foreign exchange market that day.

Lee Min-jae, an assistant manager of a finance team for Woori Bank, predicated that “the shock following the impeachment has mostly subsided and we should see a stable won-dollar exchange rate with no big fluctuations for the moment.”

The bond market did not experience any particular stir either.

The yield of three-year government bonds used as a reference rate closed the same as of March 12, and the spread on the five-year exchange stabilization bond fell 0.02 percent to 0.58 percent at 4:00 p.m. from last week, raising Korean bond prices in the foreign market.

Apart from the financial market, the real market also did not find any contraction in consumer sentiment.

Sales at the Hyundai department stores were up. At six Seoul branches, sales increased 40 percent and at the Shinsegae department store, 23 percent from March 12 to 14. Sales at Lotte also rose 21.2 percent in 19 branches on March 13, the day after the presidential impeachment.