Last week, in a strong turnout, the South Korean people voted in a new leader, Moon Jae-in, a liberal-leaning ex-human rights lawyer who promised to "realise the two main tasks people desire: reform and national unity". His willingness to enter into dialogue with the other side is in marked contrast to his conservative predecessors who have been in charge for the past nine years. He'll have his work cut out, mind you, as the country grapples with the issues we see in other developed nations: an ageing population, negligible wage growth, high youth unemployment, slow economic growth and lots of debt.
This shift has been immediately reflected in local markets, where hopes are running high for reform and a coherent stance with the 'chaebol' - the vast family-run conglomerates that dominate the business landscape. The Kospi index of all 765 shares listed in Seoul burst to a new record high this month, having seen bids working their way steadily higher since 2009. Consolidating inside a right-angled triangle pattern since 2005, this constitutes a very significant break with a potential fast rally to 2750-3000.
The South Korean won, which was one of the hardest hit currencies during the Asian crisis of 1997-98, has strengthened against the US dollar since January, in line with many other major currencies, and outpacing its regional peers. More importantly, it remains close to the stronger end of the trading band that has held sway since 2015. Were chart support at 1,100 yuan per greenback to give way, we would pencil in an appreciation towards the psychological 1,000 - or a 10 per cent revaluation.
South Korea's best-known company in the west is Samsung Electronics Company, whose mobile telephones are second only to Apple's - and it's been taking bites out of this market leader for several years. Following neat consolidation in a rectangle between 2012 and 2015, this month's rally to yet another new record high is just another phase of something we've seen since 2016. The blistering pace can obviously not be sustained ad nauseam, but with bullish momentum as strong as it is one wouldn't dream of standing in the way of this runaway train.
Our last chart is the share price of Hyundai Corporation which, like other global rust-belt industries, is in a very sorry state. Its shipbuilding arm has been haemorrhaging money for years, just like they have been in Germany and elsewhere, hitting their bankers where it hurts. This explains in good part why this chart looks very similar to those of some of the sadder European banks we looked at in this column earlier this year. The difference is that the rot set in at the start of this millennium, while banks' share prices didn't collapse until 2007 or so.
