Back-Testing the Impact of National Assembly Elections on the Korean Stock Market

• In this insight, we provide a back-testing analysis of the impact of the National Assembly Elections on the Korean stock market.

• KOSPI tends to display positive price performance one month and three months prior to the election date leading up to the election date.

• On the other hand, KOSPI tends to decline one month and three months post the election date. We believe that post National Assembly Election, KOSPI could face greater headwinds.

The National Assembly Election on 10 April 2024 is the most important political event in South Korea this year. In this insight, we provide a back-testing analysis of the impact of the National Assembly Elections on the Korean stock market. Some people would argue that the National Assembly Election could be more important than the Presidential Election in South Korea.

Share Price Performances of KOSPI in Previous National Assembly Election Periods

The tables below provide the share price performances of KOSPI in previous six National Assembly Elections which are held every four years in South Korea from 2000 to 2020. In the data below, we used four different time periods including 1 month prior to the election date, 3 months prior to election period, 1 month post election date, and 3 months post election date.

The results are quite noticeable.

KOSPI tends to display positive price performance one month and three months prior to the election date leading up to the election date. On the other hand, KOSPI tends to decline one month and three months post the election date. Of the six National Assembly elections, the only real outlier was in April 2020 when COVID-19 pandemic started to spread around the world, skewing the overall impact of the National Assembly election on the Korean stock market.