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How would the result of the U.S. presidential election affect Wall Street and the global stock market? Historically speaking, presidential elections have had a positive effect on the stock market. Out of 10 presidential elections since 1968, the stock market fell three times between the election day and 40 days after, and rose the remaining seven times. In 1976 and 1992, when the White House went from the Republicans to Democrats, the stock market rallied after the elections both times, and by a larger margin than in the reverse case.
According to the Wall Street Journal, the stock market rebounded while Franklin Roosevelt, a Democrat, and Republican Ronald Reagan were in office during the 1930s and 1980s, respectively. Both became president in lean times, but in the 12 years of Roosevelt¡¯s leadership, the stock market rose by 194 percent, and during the eight years under Reagan it rose 135 percent.
But since the current global financial crisis is of unprecedented magnitude, it is uncertain whether that history will be repeated, the WSJ said. Stock market analysts, however, said no matter who gets elected, the election will play favorably for the Korean stock market. The election will resolve much of the current uncertainty, and the U.S. government will be able to speed up financial stabilizing measures.
Kwak Jung-bo, an analyst at Hana Daetoo Securities, said ¡°If Barack Obama gets elected, he will push for protectionist trade policies and therefore, it will be negative for the ratification of the Korea-U.S. FTA. However, since he will probably carry out a drastic restructuring of the U.S. economy on the whole, and promote investment in new industries, it will create new opportunities for Korean companies.¡±
(englishnews@chosun.com )
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