[Edaily Reporter Shin Ha-yeon ] Forecasts suggest that the domestic stock market may seek a rebound starting in mid-to-late November after digesting major events such as the U.S. midterm elections and initial public offerings (IPOs) by major artificial intelligence (AI) companies. Analysts note that a full-scale return of foreign investors to the domestic stock market can only be expected once uncertainties surrounding the election results and the flow of global investment capital are resolved.

Kim Jae-seung, an analyst at Hyundai Motor Securities, suggested the possibility of a year-end rally and a market recovery early next year during a briefing with accredited reporters held at the Korea Exchange in Yeouido, Seoul, on the 27th, stating, “Overall investor sentiment is likely to pick up starting in mid-to-late November.” He emphasized, “From an investment perspective, it is more important to determine when foreign investors will be able to re-enter the market,” adding that rather than analyzing the reasons for their selling after the fact, we should focus on when the uncertainties preventing them from switching to buying will be resolved.

◇ U.S. Elections and Major IPOs as Variables… “Foreign Investors Expected to Return After Results Are Confirmed”

The first variable highlighted by Researcher Kim is the U.S. midterm elections on November 3. Although the likelihood of a “blue wave”—where the Democrats secure a majority not only in the House of Representatives but also in the Senate—has increased, he noted that the market is strongly inclined to wait for the results, given that the race is expected to be extremely close. The term “blue wave” derives from blue, the symbolic color of the Democratic Party, and refers to a trend in which the Democrats win elections and secure control of Congress.

He said, “Although we are making projections and preparing, it seems the market believes it is better to wait and see the results before taking action.” While in past midterm election years, the market tended to rebound in October following a downturn in September, he judged that the timing of the rebound could be delayed this time because the election results are difficult to predict.

He predicted that Anthropic’s IPO would create both short-term supply-and-demand pressure and an opportunity for a medium- to long-term revaluation of the AI industry. The analysis suggests that if global tech funds sell their existing holdings to accommodate the newly listed company, this could also impact domestic semiconductor stocks.

Researcher Kim explained, “From the perspective of tech stock funds, they must sell existing holdings to buy this new stock,” adding, “The stocks that have risen significantly are ultimately memory semiconductors or semiconductors in general.” He noted that with funds needing to reallocate capital ahead of a major IPO, there is little incentive for foreign investors to preemptively buy Korean stocks.

On the other hand, he assessed that the earnings and business information disclosed during the listing process could serve as an opportunity to alleviate doubts about AI profitability. He pointed out, “Once the company goes public, supply-and-demand factors will diminish significantly; conversely, I believe Korean semiconductor stocks could once again follow the trend set by Anthropic’s stock price.”

◇“Solar and ESS to Benefit in the Short Term… Semiconductors to Maintain Global Demand”

By sector, he predicted that if the “Blue Wave” materializes, a short-term reversal of the “Trump Trade” could occur. The analysis suggests that policy expectations could recover in eco-friendly sectors—such as solar power, energy storage systems (ESS), and rechargeable batteries—which had shown weakness following President Trump’s election in 2024.

However, he emphasized the need to distinguish between expectations and actual policy changes. Analyst Kim stated, “From the perspective of investor sentiment, this is certainly positive, but the actual passage of legislation will take much longer,” adding, “It is appropriate to approach this from a short-term trading perspective.” He explained that even if the Democrats control Congress, the president’s veto power remains, making it difficult for policies to be overturned immediately.

Regarding AI-related sectors, the analysis viewed the impacts on semiconductors and power equipment differently. Given the ongoing technological hegemony competition between the U.S. and China, the likelihood of restrictions on AI model development is limited; however, the analysis noted that data centers—which are linked to living costs such as electricity bills and water usage—could face stricter regulations and oversight.

He said, “There is growing concern that the longer the start of construction and completion of data centers are delayed, the more demand for power equipment could surge in the short term.” The implication is that domestic power equipment companies focused on the U.S. market should consider the possibility that the timing of demand being reflected in their earnings may be delayed.

He maintained a relatively optimistic outlook on semiconductors, as well as semiconductor materials, components, and equipment. Analyst Kim predicted, “The delay in AI data centers is occurring within the U.S., not outside of it,” adding, “The longer the delay within the U.S., the more Big Tech companies will seek out data center providers overseas to compete in the AI race.” This suggests that global semiconductor demand could continue even if data center locations shift.

Meanwhile, Choi Je-min, an analyst at Hyundai Motor Securities who presented a macroeconomic outlook that day, analyzed that a “blue wave” could reduce the risks of further fiscal expansion in the U.S. as well as rising inflation and interest rates. He explained that if mutual checks and balances between Congress and the executive branch strengthen, it will become more difficult to unilaterally push through tax cuts and spending increases.

He also predicted that the areas where uncertainty is concentrated would shift. While risks surrounding large-scale policy legislation may decrease, conflicts during budget and debt ceiling negotiations could intensify. Analyst Choi emphasized, “Uncertainty related to the debt ceiling and the budget will increase,” stressing the need to closely monitor next year’s U.S. fiscal negotiations.

He also took a cautious stance regarding expectations of abrupt shifts in foreign policy, national security, and tariff policies. Researcher Kim said, “Even if the Democrats take control of Congress, it is more likely that the administration will pursue a stronger foreign policy and national security drive rather than pulling out of Iran in the short term.”

He also predicted that pressure on domestic companies to invest in the U.S. would continue. Consequently, he noted that differentiation among companies could emerge depending on whether they actually participate in U.S. investment projects such as liquefied natural gas (LNG) and nuclear power plants. He projected, “Investor sentiment could improve for companies that directly participate in U.S. investments,” adding, “There could be a difference in investor sentiment and valuations between companies that actually invest and those that do not.”