South Korea had been navigating six months of political turbulence following former President Yoon Suk-Yeol's brief imposition of martial law late last year – a move that triggered the nation's worst constitutional crisis in decades. With Yoon officially impeached in April 2025, a snap presidential election was called. This election was largely seen as a verdict on his predecessor's actions.
On Tuesday, June 3, 2025, the nation headed to the polls with a voter turnout of 79.4%, the highest in 28 years. The result delivered a victory to left-leaning challenger Lee Jae-myung. Lee, a former labor activist, secured 49.4% of the vote. The National Election Commission officially declared him the nation's 21st president at 6:21 am local time on Wednesday, June 4, and his term commenced immediately.
According to Bloomberg, while his victory was decisive, the final tally showed a significant conservative vote, with a third candidate garnering 8.3%, indicating the combined conservative tally exceeded Lee's support even after the events leading to Yoon's removal.
However, unlike concerns that the conservative camp might not accept the results, the incumbent party candidate humbly accepted the choice of the people and congratulated Lee.
Credit: Bloomberg
With the leadership vacuum ended, the market reacted swiftly. South Korea's equity benchmark, the Kospi Index, climbed as much as 2.5% on June 4, putting it on track to enter a bull market. This surge took its gain from the April low to over 20%. Investors piled into stocks anticipating they would benefit from Lee's reform and growth agenda. Holding companies, financial firms, and brokerage stocks led the Kospi higher on expectations that Lee would push for legislative changes as early as this month aimed at boosting shareholder returns.
The Korean won also saw gains, rising 0.5% against the US dollar, extending its rally into a second trading session. However, the bond market showed some caution, with Korean government bonds underperforming and the 10-year yield rising about ten basis points, reflecting concerns about potentially increased supply due to the new administration's likely expansionary fiscal policy.
For the market, Lee's victory removed one of the biggest uncertainties impacting the local landscape. Investors are anticipating a longer-term structural rebound. Lee's emphasis on corporate reform, particularly his promise to strengthen corporate boards' fiduciary duty to shareholders, is seen as very positive. This reform is expected to address what the market considers the biggest cause of the "Korea discount" – a term referring to the undervaluation of Korean stocks.
This focus on reform could pave the way for a "valuation re-rating," potentially pushing the Kospi above the 4,000 level through legislative changes targeting increased dividends and shareholder returns. Lee himself set an ambitious target for the Kospi to reach the 5,000 level, vowing to end the Korean discount.
Market focus now turns to Lee's specific policies aimed at shoring up growth, including more government spending, improved corporate governance, and stronger labor protections. He has proposed a KRW35 trillion (approx. US$25.4 billion) stimulus package to aid households and businesses. Other planned initiatives include increasing housing supply and curbing the power of the nation's family-run conglomerates.
Lee will also need to wrap up ongoing tariff negotiations and currency talks with the Trump administration. Lee faces the immediate challenge of shoring up trade and military ties with the US, balancing this with efforts to improve relations with China and North Korea. He aims to quickly stabilize the situation on the Korean Peninsula to minimize "Korea Risk". Regarding trade talks with the US, Lee believes South Korea possesses "decent bargaining chips" and plans to "play it well".
Credit: Bloomberg
A key relationship under scrutiny is that between Lee Jae-myung and Samsung Electronics Chairman Lee Jae-yong. Lee Jae-myung has stressed the importance of cooperation between the government and large corporations, including Samsung, stating that when companies do well, the nation prospers. He sees enhancing the international competitiveness of large enterprises as crucial in a global competitive environment.
Lee has visited Samsung facilities and met with Lee Jae-yong, a move seen by some as a symbolic shift in his political stance. He views Samsung as a core partner for national growth, particularly highlighting its dominance in global technology competition and its importance for the cultivation of new industries like artificial intelligence (AI) and semiconductors.
Discussions suggest potential for increased strategic cooperation in these areas, as well as in electric vehicle components and biotechnology. As President Trump's second term begins and protectionism impacts global supply chains, Lee has indicated he will continue to listen to the voices of export-oriented large corporations like Samsung.
Unlike his predecessor, Lee will have the National Assembly in his corner. His party's control of the unicameral legislature is expected to accelerate the implementation of his election pledges.
Despite political uncertainties and a sluggish economy — which contracted in the first quarter and faces challenges from potential US tariffs — Korean stocks and the won have shown resilience this year, outperforming most Asian peers. The Kospi is already up 15% so far this year. A market strategist anticipates the Kospi index could climb above the 2,800 level in the third quarter, suggesting buying on dips remains a reasonable strategy.
However, potential risks remain. The bond market move highlighted concerns about potentially more debt. Relatively strict labor regulations and direct debt relief for small businesses could also cloud the outlook. While Lee's control of parliament could facilitate policy, one expert noted that governing unilaterally, even with executive and legislative control, may not address the underlying partisan polarization.
Lee's first stated task is to prevent a recurrence of martial law, and his second is to revive the economy. For many citizens, tackling the economy means improving everyday livelihoods, access to affordable housing, and rewarding jobs, not just protecting exports.
Lee's victory marks a turning point for South Korea after six months of chaos, bringing a focus on economic revival, corporate reform, and navigating complex international relations.
Article edited by Jack Wu
