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China Backlash a Risk for Korean Stocks From Presidential Race

  • Candidate pledges to expand U.S. missile system if elected
  • China retaliated economically when Thaad was first deployed
Yoon Suk-yeol, presidential candidate from the main opposition People Power Party, during a presidential debate in Seoul on March 2.

Yoon Suk-yeol, presidential candidate from the main opposition People Power Party, during a presidential debate in Seoul on March 2.

Photographer: Lee Young-ho/Sipa/Bloomberg

Military policy looms as a risk for South Korean stocks as one of the leading contenders in its presidential election calls for the expansion of a missile defense system that in the past angered Beijing and led to consumer boycotts.

Analysts see shares of companies spanning cosmetics and confectionery to arts, entertainment and tourism as the first to suffer if Korea draws China’s ire again, like it did the last time a conservative party candidate won office. These sectors went from market darlings in 2015 to laggards the following year when Chinese travelers shunned the destination and its shoppers turned away from Korean products.