Is a country defined by its leader, or, is a leader defined by his/her country? This is not a trick question. 

In its editorial debut, Elliott Wave International’s May 2008 Asian Financial Forecast rocks the foundation of conventional wisdom with the following revelation: Presidents DO NOT influence the mood of their nation’s people, or the movement of its stock markets.  

Instead, social mood determines the direction of stocks AND the outcome of political elections.  

To capture this phenomenon, the Asian Financial Forecast presents a mind-blowing chart of the historical relationship between South Korea’s stock market AND its Presidential leaders since 1985. In AFF’s own words: “Conservative revolutions after long periods of liberal rule [coincide] with long-term bullish wave counts; [conversely] the trend against incumbent political authorities is related to downturns in the regions stock markets.”  

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A brief record of South Korea’s past confirms AFF’s principal message:  

1985-1993: The Korean Composite Stock Price Index (KOSPI) skyrockets off its 100 base value to above 1,000 in 1989. South Korea rises out of the ashes of war to become a major global producer of automobiles, ships, steel, and electronics -- ultimately recognized worldwide as “The Miracle of the River Han.”  

During the unprecedented boom, S.K. is ruled by the conservative Democratic Justice Party (DJP): first under General Chun Doo-hwanand secondly by Roh Tae-Woo.  

1993-1998: The Kospi Index settles into a natural rising rhythm at/near 1,000. In the first half of this period, South Korea is the world’s fastest growing economy. Only by merging his Peaceful Democratic Party with the widely popular incumbent DJP does Kim Young-sam secure the Presidency.  

In 1997, the East Asian Financial Crisis strikes the heart of Korea, initiating economic collapse. In a year’s time, the Kospi Index plummets nearly 30% to a decade low. The mood is ripe for a public revolt against the long-standing incumbent government.  

1998-2003: Kim Dae-jung -- a liberal reformist, high school educated, political exile from Korea’s poorest region defeats the college-educated Supreme Court Justice, wealthy incumbent party candidate. 

The “Lost Decade” of South Korea’s economy begins. The KOSPI crawls range bound below 1,000 for the next ten years. The bedrock of Seoul’s economy, family-owned conglomerates, crumbles. 1997: Kia Motors shut down. 1999: Daewoo sees one of the largest bankruptcies in world history. 2003: just over half of the 30 largest corporations remain. Moody’s downgrades South Korea from A1 to B2. 

2003-2008: The first half saw no change in South Korea’s economic plight, and liberal nominee Roh Moo-hyunhad no trouble winning the Presidential race. By 2005, however, the country’s growth rate began to recover from a meager 3% to 5.1%.  

That year, Roh’s popularity plunged to an all-time record low and calls for impeachment hit a fever pitch.  

In 2007, the Kospi Index soared past the 2,000 mark for the first time ever. The liberal reign had officially ended.  

2008: February: Grand National Party candidate Lee Myung-bak takes office after having won by the highest victory margin in the history of South Korea’s presidential elections. Here, the Asian Financial Forecast makes the following observation: “The pendulum has now swung the other way. Waves of conservatism have swept through the nation.”