With the election of Democrat Joe Biden as the next US president, investors here and abroad are paying keen attention to the impact of the outcome on the financial market.

What was widely perceived as a worst-case scenario in the eyes of market watchers -- a Biden presidency combined with Republican control of the US Senate -- has so far instead given a boost to the market. The results defied predictions of a bearish gridlock that might derail stock markets, primarily centering on the Democrats’ looming antitrust actions against Big Tech, targeting leading US technology companies Apple, Google parent Alphabet, Amazon and Facebook.

“The Biden victory will lead to more fiscal spending on environmental policies, while Republicans’ Senate control will put the brakes on taxation and regulations on Big Tech,” Kim Hak-kyun, head of the research center at Shinyoung Securities, wrote Sunday.

“The market has been selective when reacting to news events.”

Kim added that investors should watch how Republicans respond as incumbent President Donald Trump has so far refused to concede and is looking to challenge his defeat in the Supreme Court.

“It is important to closely watch if Republicans flock to support Trump’s refusal as a whole,” he wrote. “Stocks and bonds had overreacted to the US election news, and their price may reduce to their intrinsic value until the end of this year.”

Over the past week, US stocks showed their best weekly performance in eight months with a $2.6 trillion boost in value. South Korean shares jumped in tandem. The nation’s main bourse Kospi surged 6.6 percent last week, while the development bourse rose 5.6 percent.

Most notably, US Big Tech stocks rose sharply after vote counts started to show Biden taking the lead against Trump on Wednesday. Since then, Apple has risen 7.5 percent, Alphabet has soared 6.9 percent, Amazon has climbed 8.6 percent and Facebook has jumped 10.6 percent.

Setting the surprise aside, Kim said investors should be wary of the “substantial threat” that the divided US Congress could present for the global stock market, given that Big Tech regulations are expected to become an irresistible trend that even a Republican-dominated Senate cannot reverse.

This is likely to impact not only investors in Korean stock markets, but US markets as well. Korean investors’ combined stock holdings in Big Tech companies exceeded $6 billion as of Friday, according to data from the Korea Securities Depository.

On the other hand, some analysts painted a rosy picture of the new presidency.

Seo Jung-hun, an analyst at Samsung Securities, said the Biden presidency and the likely weakening of the US dollar as a result of his Keynesian policies could make Korean stocks more attractive to foreign investors as the Korean won gains value against the greenback.

According to a Samsung Securities estimate, the Korean won has risen 5.3 percent against the dollar in the past three months, showing a sharper increase than the currencies of China, Japan or India.

“We expect the stronger Korean won to lead to more net buying by foreign investors,” said Seo. “The remaining noise (surrounding the US election results) is not loud enough to buck the trend.”

By Son Ji-hyoung (consnow@heraldcorp.com)