Financial Markets React to Trump's Lead in U.S. Presidential Election

As the U.S. presidential election vote count continues, former President Donald Trump is leading in six out of seven swing states, causing significant ripples in the financial markets. On Nov. 6, Bitcoin, the leading cryptocurrency, surpassed $74,000, setting a new all-time high, while the won-dollar exchange rate surged by more than 20 won, reflecting market reactions to Trump's potential victory.

Although the U.S. presidential election results have not been finalized, Trump has shown an advantage in seven key battleground states, increasing his chances of winning. Trump secured 251 electoral votes by winning major battleground states such as Georgia and North Carolina. If he wins Pennsylvania (19 votes), he will secure 270 votes and clinch victory. The New York Times predicted Trump's probability of winning at 91% as of 1:25 p.m. (Korean time) on this day.

The financial markets have responded swiftly to these developments. Bitcoin was trading at $74,233 as of 1:20 p.m., up 8.7% from the previous day, surpassing the previous all-time high of $73,750 set on March 14, 2024. This surge is interpreted as a result of Donald Trump, the Republican candidate, quickly securing electoral votes and gaining an advantage in the early stages of the vote count.

Meanwhile, the won-dollar exchange rate surged by more than 20 won, soaring to 1,399 won. According to the Seoul Foreign Exchange Market, as of 1:30 p.m., the won-dollar exchange rate was trading at 1,397.6 won, up 19 won from the previous day's closing price of 1,378.6 won. Around 12 p.m., it surged by more than 21 won to 1,399.7 won. This increase is attributed to the expectation of Trump's victory, which led to a stronger dollar. The market anticipates increased volatility in the won-dollar exchange rate depending on the vote count results of major swing states in the U.S. presidential election.

The Korean stock market experienced fluctuations due to the U.S. presidential election results, ultimately closing lower. As the likelihood of Republican candidate Donald Trump's victory increased, major industries such as secondary batteries and semiconductors, which were expected to lose the benefits of the "Inflation Reduction Act (IRA)" amid U.S.-China trade tensions, saw significant declines.

According to the Korea Exchange, the KOSPI index closed at 2,563.51, down 13.37 points (0.52%) from the previous trading day. The KOSPI index started the day at 2,591.90, up 15.02 points (0.58%) from the previous trading day, but fell by more than 1% as Trump's chances of winning increased.

On this day, foreign investors net sold 107.7 billion won in the securities market. In contrast, institutions net bought 50 billion won, and individuals net bought 9.1 billion won.

As Trump's chances of winning increased, sectors such as defense, shipbuilding, finance, and Ukraine reconstruction themes are expected to benefit. On this day, defense stocks such as Satrec Initiative (10.53%), Innospace (10.51%), Hanwha Aerospace (7.04%), and LIG Nex1 (6.35%) rose. Additionally, virtual asset-related stocks such as Galaxia Moneytree (23.27%), T Scientific (16.21%), and Woori Technology Investment (9.05%) also increased. Financial stocks such as BNK Financial Group (4.28%), Shinhan Financial Group (3.32%), KB Financial Group (3.30%), and JB Financial Group (3.07%) emerged as beneficiaries.

Notably, Sambo Construction, considered an Ukraine reconstruction theme stock, closed at 702 won, up 30.00% from the previous trading day. Other companies such as SY Steel Tech (29.81%), a steel and construction materials company, SG (29.22%), an asphalt concrete company, and Hyundai Everdigm (23.60%), an industrial machinery and special fire truck company, recorded gains of over 20%.

On the other hand, sectors expected to suffer under Trump, such as secondary batteries, electric vehicles, and eco-friendly energy, declined. LG Energy Solution, a leading secondary battery stock, fell 7.02%, while Samsung SDI dropped 5.98%, and SK Innovation decreased by 4.64%. EcoPro BM and EcoPro also fell by 8.63% and 7.61%, respectively.

Lee Kyung-min, a researcher at Daishin Securities, stated, "The KOSPI is showing weakness as it is expected to be a victim of U.S.-China trade conflicts if Trump is re-elected, and major sectors are concerned about the loss of Democratic IRA benefits. It remains to be seen whether Trump's mentioned pledges will materialize as investors fear, requiring further confirmation."

The KOSDAQ index closed at 743.31, down 8.50 points (1.13%) from the previous trading day. The KOSDAQ also started at 757.23, up 5.42 points (0.72%) from the previous trading day, but turned downward during the session. In the KOSDAQ market, institutions net bought 41.6 billion won, and individuals net bought 29.6 billion won, while foreigners sold 60.5 billion won.

Among the top KOSDAQ market capitalization stocks, Alteogen (2.76%), Rigem Bio (1.54%), Hugel (9.93%), Classys (0.39%), and HPSP (5.60%) rose.