Election won’t rattle financial market in BNP Paribas’ view

HONG KONG - Korea’s financial markets will not likely see a drastic change after the presidential election slated for later this month as the two major candidates have similar economic policy aims, a report said yesterday.

The presidential election will be held on Dec. 19, with current poll results indicating it may become a neck-and-neck race.

“There is a chance of drastic change post-election, but the probability of this may be relatively low,” said a BNP Paribas report.

Both of the two major presidential candidates plan to introduce tighter policies for conglomerates, which may reduce investment activities in Korea, it said.

Economic democratization is a popular slogan used by both the ruling and opposition camps in their campaigns to curb the power and wealth of conglomerates and promote the growth of small firms.

Park Geun-hye of the ruling Saenuri Party suggested in her policies that fresh cross-shareholding investment between affiliates within a big conglomerate would be banned, although existing cross-holdings are not required to be dissolved.

Moon Jae-in of the main opposition Democratic United Party proposed in his policies not only a similar banning of cross-shareholding but also forcing the affiliates to end existing cross-investments within three years.

“Park’s policies strike a similar tone but are to some extent watered down,” the report said. “Although Moon is more ambitious in this area, the Saenuri parliamentary majority is ultimately likely to temper the ability of Moon to deliver on his promises should he win the election.”

BNP Paribas cited the Federation of Korean Industries’ estimate that such plans to unravel the Korean conglomerates’ cross-holdings would cost the top 30 Korean firms 39 trillion won ($36 billion), which is equivalent to 3 percent of the investment bank’s estimate for Korea’s nominal GDP next year.

Yonhap