Since the launch of the new government emphasizing the revitalization of the stock market, the domestic stock market has risen significantly. However, the stock prices of specific sectors showed a sharp decline after government interference. Shares related to electricity, gas, distribution, and food, which the government mentioned were excessive in terms of price increases or tariffs, experienced a significant drop. Concerns arose that corporations would bear the burden of expenses due to government regulations or would be unable to increase revenue.
Additionally, the telecommunications and banking sectors are industries where government influence can be strong. These sectors have also experienced significant stock price increases amid expectations that the new government will push for amendments to the Commercial Act to protect shareholder interests. While the expectation of expanding shareholder returns is a factor for rising stock prices, the potential for government price regulation poses risks to stock prices. Investment decisions should consider both factors.
President Lee Jae-myung demanded measures to stabilize prices from each department during the second emergency economic inspection task force meeting held on 9th. With the newly launched government focusing its economic policies on price management, corporations and shareholders appear to be on high alert.
At that meeting, President Lee Jae-myung asked, "I heard that prices have risen tremendously recently. Is it true that one ramyeon costs 2,000 won?" This statement led to a decline in stocks related to food. Shares of Nongshim, a major player in the domestic market, plummeted, and OTOKI also fell.
The following day, on the 10th, electricity and gas companies were hit hard. As the possibility of freezing public utility rates increased, the stock prices of Korea Electric Power Corporation, Korea Gas Corporation, and Korea District Heating Corporation, which had surged recently, collapsed.
President Lee noted during his candidacy, "(Electricity prices) might feel expensive right now, but we inevitably need to raise them in the future," while also saying, "However, due to the current dire economic situation and difficulties in people's livelihoods, it's hard to tackle electricity prices at this moment." Typically, electricity and gas prices are frozen in the year a new government takes office.
Stocks in the retail sector underwent adjustments due to concerns that regulations on large supermarket operations would be tightened. The ruling Democratic Party of Korea is pursuing an amendment to the Distribution Industry Development Act to expand mandatory holidays for large supermarkets.
Retail stocks such as Emart and Lotte Shopping, which rose on expectations that the new government would promote domestic demand, plummeted on the 10th. The stock prices, which had increased due to expectations for new government policies, fell again due to concerns over those policies.
While not directly affected at the moment, the telecommunications, banking, and insurance sectors could also be significantly impacted by government regulations. If the government continues to emphasize price management, it would be virtually impossible for these corporations to raise prices on their products and services.
Given that the new government launched with high support, it is expected that the pace and intensity of policy implementation will be fast and strong. While stock market revitalization policies have been most emphasized, policies related to price management that could lead to declining stock prices are also on standby. Experts advise that investments should consider policy factors from various angles.