As Donald Trump takes office as the 47th President of the United States on January 20, 2025, attention is growing on how his policies will impact the Korean stock market. Consequently, the domestic stock market is expected to be influenced in various ways amidst these changes.
First, the defense industry sector is drawing attention, as President Trump emphasized strengthening border security in his inaugural address and declared a national emergency at the southern border while announcing the deployment of troops. This defense-oriented policy is likely to lead to increased U.S. defense industry investments, which could have a positive impact on South Korean defense companies by expanding their exports.
The U.S.-South Korea relationship is also a crucial variable. President Trump has reiterated his “America First” stance, making it clear that U.S. interests will be prioritized above all. Consequently, new challenges are expected to emerge in the U.S.-South Korea alliance, including intensified pressure on South Korea in defense cost-sharing negotiations. This could increase economic and stock market uncertainty domestically.
Regarding trade policies, President Trump did not issue an executive order on tariffs on his first day in office. This indicates that no immediate trade barriers have been imposed on South Korean exporters, potentially benefiting the domestic stock market in the short term. However, the possibility of protectionist policies being reinforced in the future cannot be ruled out, necessitating continuous monitoring.
From an economic policy perspective, controlling inflation has been identified as the top priority. President Trump has also emphasized support for energy production and has expressed his intent to withdraw from the Paris Climate Agreement in pursuit of energy dominance. As a result, traditional energy-related industries may benefit, while the electric vehicle and renewable energy sectors could face challenges due to delays in regulatory easing.
The cryptocurrency market is another area of interest. While President Trump has personally launched a cryptocurrency token, signaling his interest in the sector, no clear regulatory direction has been provided by his administration. As a result, high volatility is expected in the cryptocurrency market, and investors should approach with caution.
Several factors are also influencing the overall domestic economy. Following President Trump’s remarks on controlling inflation, the KRW-USD exchange rate has plunged to 1,430 KRW per dollar, increasing exchange rate volatility. This could affect the price competitiveness of South Korean exporters and serve as a destabilizing factor in the domestic stock market, making close monitoring of exchange rate trends essential.
In summary, President Trump’s re-election is expected to introduce new variables into the global economy and the Korean stock market. Significant changes are anticipated in defense, trade policies, energy, and cryptocurrency markets, presenting both new opportunities and challenges for investors. Given that the redefinition of the U.S.-South Korea relationship, as well as shifts in trade and exchange rate policies, could have direct impacts on the Korean economy, closely analyzing the early policy announcements of the Trump administration is crucial.
While the ultimate impact of President Trump’s return on the Korean stock market remains uncertain, his policy direction will undoubtedly bring shifts to global markets. Accordingly, domestic investors should adopt a cautious and strategic approach to navigate the evolving economic landscape.
