[In-depth Economic Analysis] 1 Year After Martial Law (Part 2) | The Truth of Foreigner Exodus from KOSPI and Real Estate Polarization
[In-depth Economic Analysis] 1 Year After Martial Law Series (Part 2): Asset Market Check
In Part 1, we covered the exchange rate and consumption stagnation. In this Part 2, we analyze the scars left by the declaration of martial law on the Stock Market (KOSPI) and the Real Estate Market. We will examine the skyrocketing Sovereign Credit Risk (CDS), the massive exodus of foreigners, and the extreme asset polarization through data.
1 Year After Martial Law (Part 2): KOSPI Exodus and Real Estate Polarization
1. Stock Market: The Price of Lost Trust, 'Sell Korea'
Capital is the most cowardly. The most immediate and violent reaction immediately after the declaration of martial law came, as expected, from foreign investors. Over the past year, the KOSPI market has been thoroughly alienated from the global stock market rally.
(1) Surge in CDS Premium and Cost of Capital
The CDS (Credit Default Swap) Premium, which indicates Korea's default risk, skyrocketed on the day of the martial law declaration and has yet to recover to previous levels. This means Korean companies have to pay more interest when borrowing money overseas, implying that Korea is no longer a 'safe haven' for foreigners.
(2) KOSPI vs S&P500 Decoupling
While the US S&P500 hit new all-time highs riding the AI boom, KOSPI remained trapped in a box range. The so-called Decoupling phenomenon has deepened.
| Category | S&P500 (US) | KOSPI (Korea) |
|---|---|---|
| 1-Year Fluctuation | ▲ Uptrend | ▼ Decline/Sideways |
| Supply/Demand Entity | Global Capital Inflow | Massive Foreign Selling |
| Key Risk | Prolonged High Interest Rates | Geopolitical Risk (Korea Risk) |
In particular, foreigners continued their selling spree, centering on large-cap stocks including Samsung Electronics. "There is no reason to increase exposure to Korean stocks unless political uncertainty is resolved," is the common view of Global IBs.
2. Real Estate Market: Transaction Cliff and 'Hyper-Polarization'
The real estate market unfolded differently from the stock market. Rather than a crash, the key keywords are 'Disappearance of Transactions' and 'Regional Hyper-Polarization'.
(1) Flight to Safe Assets, 'One Smart House'
As uncertainty grew, wealthy individuals either held onto cash or hid in assets believed to be the safest. As a result, prices in core areas such as Gangnam's 3 districts and Yongsan in Seoul defended against declines or even recorded new highs.
Conversely, the provincial real estate market took a direct hit. As unsold inventory failed to clear and auction items piled up, the asset gap between Seoul and the provinces widened to record levels.
Key Summary:
Market participants are now prioritizing 'Liquidity' and 'Safety' over 'Profitability'. This acts as a factor increasing selling pressure on non-core assets.
3. Conclusion: The Era of Do-It-Yourself Survival
The economic cost left by the one year since martial law is more than just simple numbers. It signifies that the cause of the 'Korea Discount' has expanded beyond corporate governance to National System Risk.
In the stock market, asset allocation to US index ETFs (SPY, QQQ) has become even more essential, and in the real estate market, polarization is likely to become the 'New Normal'. Now is the time to focus on risk management rather than aggressive investment, while waiting for signals of restored market trust.
The content of this blog is only for reference for investment judgment, and investment decisions must be made under the individual's judgment and responsibility. Under no circumstances can the information in this blog be used as evidence of legal responsibility for investment results.
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