South Koreans have elected conservative Yoon Suk-yeol to be the country’s next president. The vote was the closest in Korean history, with Yoon beating rival Lee Jae-myung, the candidate of the governing centre-left Democratic party, by less than 1%. Yoon will take the reins of the world’s tenth-biggest economy from incumbent Moon Jae-in in May.
The campaign saw “unprecedented levels of toxic rhetoric, mudslinging and lawsuits”, says the Associated Press. Moon’s two immediate predecessors have both been convicted on corruption charges, a sign of a deep-rooted rot in South Korean politics.
The economy finished 2021 “on a strong note, with GDP up 4.1% year-on-year in the fourth quarter”, says IHS Markit. Exports soared 26% to a record high of $645bn last year thanks to strong global demand for semiconductors, petrochemicals and cars.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Yet ordinary voters are not feeling prosperous, says Steven Borowiec for Nikkei Asia. “The South Korean public is increasingly anxious over growing inequality, particularly in the form of housing prices, which skyrocketed under Moon.” Many younger voters backed Moon at the 2017 election, but the housing situation and youth unemployment prompted many of them, especially “angry young men”, to switch to Yoon this time, says Sotaro Suzuki, also in Nikkei Asia.
Balance of power
Yoon’s victory could “reshape the balance of power in East Asia”, says Phelim Kine for Politico. Previous Korean governments have tried to balance the US, the country’s key military ally, with China, its biggest trading partner. Yet “public antipathy toward China” is rising. Yoon is likely to align the country more closely with the “quad”, a “regional geostrategic grouping” of the US, Japan, India and Australia.
Meanwhile, the promise of new economic policies could bring renewed vigour to a stockmarket that is down 11% this year. Nuclear energy, tech and construction stocks bounced on Yoon’s victory. Yoon’s party “promotes market-led solutions and a relatively light role for the government” as well as “renewed support for nuclear energy”, says Scott Snyder at the Council on Foreign Relations.
South Korea is still classed as an emerging market by index provider MSCI, despite a GDP per capita similar to Italy’s, says Frances Yoon in The Wall Street Journal. Korean equities trade at a discount to those in comparable markets. An upgrade to developed status could bring $44bn in foreign investment, says Goldman Sachs. That will require the authorities to liberalise currency markets, which have remained tightly regulated since the 1997-1998 Asian financial crisis. If an upgrade comes, it will probably not happen until “2024 at the earliest”.
-
NFU Mutual and M&S among most trusted insurers as big brands beat smaller rivalsValue for money is a big concern for customers buying insurance, helping to send overall trust scores down to a four year low
-
Millions of shoppers can claim up to £70 compensation – do you qualify?Millions of shoppers will be able to claim their share of a £200 million settlement from Mastercard. We explain who's eligible, how the process will work, and when you could get the money
-
'Rachel Reeves' plan to force pension funds into UK assets won't work'Opinion Hustling pension fund cash into British assets sounds like a good idea. It would be better to make Britain an attractive place to invest, says Matthew Lynn
-
Supersonic travel: How China could 'leapfrog' US and Europe's commercial aviation industryOpinion Innovation in commercial aviation has been stuck for 60 years. A commercial supersonic jet might be back on the market soon, but will China get there first?
-
How British businesses can tackle Trump's tariffsThe majority of British businesses are likely to take a hit from the chaos caused by Trump’s tariffs to reorder global trade. Companies in the firing line face some difficult decisions, says David Prosser
-
Trump wants to colonise Mars – will it happen?Donald Trump wants to plant the US flag on Mars. Could humans really live there?
-
Why are energy bills so expensive in the UK?Electricity bills in the UK are higher than in any comparable rich country. Some blame the net-zero zealotry of the government for that. What is really to blame for high energy bills?
-
Will Putin invade Europe? Why investors know Russia is a paper tigerOpinion Markets are right to ignore talk of Putin invading Europe, says Max King.
-
Why French far-right leader Marine Le Pen has been banned from running for officeMarine Le Pen, presidential candidate and leader of France's right-wing National Rally party, has been barred from standing by the country's judges.
-
Five years on: what did Covid cost us?We’re still counting the costs of the global coronavirus pandemic – and governments’ responses. What did we learn?
