South-North economic cooperation will gain momentum, and the burden of military spending will ease, helping to boost the gross domestic product, Yang projected.

"Looking further, a major part of the military spending from tense inter-Korean relations can be funneled to industries, which can have the effect of making the entire economy more active," he said. "If the Korean won stays strong from lessening of tensions, we can expect to induce foreign investors looking for profit from exchange rates to invest in Korean firms."

Shinhan Investment Corp. expected shares related to inter-Korean economic cooperation to benefit first from the peace treaty, while offshore investors will likely pick up leading IT stocks like Samsung Electronics and SK hynix.

Kim Yoo-gyeom of Cape Investment & Securities said regardless of the Korea discount, ending tensions with North Korea will allow for a step forward in inter-Korean economic ties. "The pros of investment in Korea will increase," he said.

A peace treaty could lead to North Korea abandoning its nuclear weapons in exchange for a security guarantee, Kim said.

"If sanctions against the North are eased and cross-border economic relations pick up, that will be positive for our economy too."

Byun Joon-ho of Yuanta Korea Securities said he doesn't expect much change from the peace talks. He argued that geopolitical issues do not affect the market's fundamental strength, as shown in the past when impacts from tensions or unexpected incidents lasted only a few days on the market.

"Given the profit rate and the level of valuations of currently listed firms, it's difficult to conclude that the confrontational state with North Korea was bringing down corporate value," Byun said. "Korea is not at war in a realistic sense. Declaring an end to the war will not become a factor for pushing up the market." (Yonhap)