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South Korean President Yoon Suk Yeol suffered a major defeat in parliamentary elections that will leave him in a weakened position for the remaining three years of his term and facing greater opposition to his agenda that includes investor-friendly policies.

Yoon’s conservative People Power Party-bloc is poised to secure about 105 seats in the 300-seat unicameral parliament, known as the National Assembly, down from 119 before the vote. The opposition Democratic Party-bloc is set to expand its majority with about 172 seats, according to more than 95% of ballots counted by the National Election Commission as of Thursday morning. The DP group held 169 seats before the vote.

The Rebuilding Korea Party, launched by a former justice minister aligned with the DP, has likely landed 10 seats, meaning the anti-Yoon alliance has gained enough legislative clout to bulldoze through its agenda without being hamstrung by filibusters.

Turnout was estimated at 67%, which would be the highest in 32 years, the National Election Commission said. It is the only national referendum during Yoon’s term. 

With a continued majority, the DP-bloc can halt PPP policy priorities that include fiscal restraint, reducing regulations on businesses, taking on labor unions and cutting taxes on real estate transactions.

If the Democratic Party-led bloc reached 200 seats, it would have had the power to amend the constitution, override any presidential veto and approve impeachment measures — effectively hobbling and perhaps even ending Yoon’s government. 

Yoon won the presidential race in 2022 by the narrowest margin of any candidate and Park Won-ho, a political science professor at Seoul National University, said the results from the parliamentary elections indicate the president has been unable to expand his support base since then. 

“He should have tried to embrace the centrist voters” instead of wielding presidential power and using the veto to block initiatives from the opposition, Park said. “This race was a hard one to win for the conservatives.” 

Shortly after exit polls were reported, cheers and applause erupted at an auditorium where Democratic Party candidates were watching the live broadcast of exit poll results. Meanwhile, Han Dong-hoon, who led the ruling party’s campaign for the elections, said the numbers were “disappointing.”

The results indicate that Yoon’s plans to abolish a capital gains tax on income from financial investments could be scuttled along with his flagship policy of boosting stock valuations via the “Corporate Value-Up” program. That plan calls for offering tax incentives to encourage listed firms to improve their valuations, a measure that requires parliamentary approval.

Read more: Corporate Reforms at Risk From Opposition Win in Korea Election

Stocks and the South Korean won have already started to retreat in recent weeks ahead of the vote amid concern the left-wing opposition would score a major victory. 

DP leader Lee Jae-myung had proposed a total 13 trillion won ($9.6 billion) in cash handouts to citizens as a way to revive the economy while he was on the campaign trail. The Democratic Party has been looking to increase taxes on wealthy individuals and the chaebol conglomerates that dominate the corporate landscape.

The party has battling image problems, with its leader Lee in court the day before the vote for one of many hearings related to charges of graft, which he denies.

The Rebuilding Korea Party, launched by Cho Kuk, a justice minister during the administration of Yoon’s predecessor President Moon Jae-in, declared “a victory for our people” after exit polls projected he would grab 12 to 14 seats, which would have raised the chances of enough votes to enact impeachment procedures. Cho left office in disgrace. He was charged and later convicted of academic fraud and unlawful interference with a government inspection.

Surveys conducted ahead of the election showed the top issues for voters were tackling inflation eating into paychecks, reining in housing prices and providing strength for the country’s export-driven and slowing economy.

Wednesday’s vote also took place as a prolonged walkout by trainee doctors upset over plans to increase medical school seats clouded the race. Polls indicated the public was growing tired of the labor dispute even though it sided with the government’s plan to add more doctors.

Read more: Deaths From Doctor Shortage Fuel Election Angst in Korea 

Of the 300 parliamentary seats, 254 are settled by direct elections in constituencies and the rest are allotted by proportional representation. The term in office ends in four years. 

Yoon’s main foreign policy initiatives, which don’t require parliamentary approval, are likely to be unaffected by the election results. These include closer security cooperation with the US and Japan, and taking a tough line with North Korea.

--With assistance from Alan Wong, Paul Jackson and Youkyung Lee.

(Updates with results with most ballots counted, adds a chart.)

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