“In the beginning, it seemed that individuals and businesses were trying to cut down on consumption,” said Kim Young-joon, head of research at Kyobo Securities. “But they’ll continue to adapt (to the new law) and we expect consumption sentiment to improve over time.” (image: KobizMedia/ Korea Bizwire)
SEOUL, Jan. 6 (Korea Bizwire) – Korea’s anti-corruption law, which took effect on September 28 of last year, did not have as great an impact on the local stock market as initially expected, according to financial watchdogs.
Instead, the stock market was more sensitive to China’s retaliatory measures against Korea’s decision to deploy a THAAD missile battery, and the political scandal surrounding President Park Geun-hye and her confidante Choi Soon-sil.
According to Kang Hyun-cheol, head of investment strategy at NH Investment & Securities, although businesses affected by the anti-graft law overlap with those influenced by THAAD row, investors seemingly paid more attention to issues with China.
In fact, retail businesses that were expected to suffer most from the introduction of the anti-graft law actually saw their stocks rise over the past three months.
Shares of E-Mart, for instance, saw a 14.01-percent increase from 157,000 won ($132) per share on the day before the law’s implementation to 179,000 won after 100 days, on January 4.
Similarly, Lotte Shopping saw its shares peak at 242,000 won a month into the implementation, from 207,500 won on September 27, although they have dropped since, and shares are now being traded at 216,000 won as of Friday morning.
“In the beginning, it seemed that individuals and businesses were trying to cut down on consumption,” said Kim Young-joon, head of research at Kyobo Securities. “But they’ll continue to adapt (to the new law) and we expect consumption sentiment to improve over time.”
However, there are those that claim it’s too early to determine the full effects of the law on financial markets.
Ahn Ji-young, an analyst from IBK Securities, said, “it is undeniable that the anti-graft law, in addition to poor economic conditions, intimidated the retail industry,” adding that “department stores, in particular, suffered heavily.”
Kang also added that prospects for the Korean stock market are not as encouraging among foreign securities analysts.
“The deployment of the THAAD battery, substandard economic growth, and nearing the end of a presidential term are some of the reasons that are cited, but the overall economic slump and poor consumption resulting from the anti-graft law are also big factors.”
By Joseph Shin (jss539@koreabizwire.com)
