[Edaily Reporter KIM YOON-JEONG ] As the possibility of a landslide victory for the Democrats in the U.S. midterm elections came into focus, the domestic stock market experienced extreme volatility, with mixed results across different sectors. While major semiconductor stocks weakened amid concerns over tighter regulations on artificial intelligence (AI) data centers, renewable energy and rechargeable battery-related stocks surged on expectations of policy benefits. The securities industry suggests that concerns over a slowdown in AI investment may have been overreacted, while also noting the stabilizing effect on interest rates resulting from efforts to curb U.S. fiscal expansion.

◇KOSPI Swings Sharply on Prospect of a Democratic Landslide… Mixed Fortunes for Semiconductors and Eco-Friendly Stocks
According to MP Doctor on the 4th, the KOSPI index opened more than 2% higher that day, buoyed by an overnight rebound in U.S. semiconductor stocks, and soared to 5,828.13 early in the session. However, around 10:00 a.m., the mood shifted dramatically as the possibility of a larger-than-expected Democratic victory in the U.S. midterm election results came into focus. Concerns intensified that the Democratic Party’s expanded influence in Congress could lead to stricter regulations on the construction of AI data centers, potentially delaying AI investment. As Nasdaq 100 futures fell and foreign investors joined the selling, the KOSPI gave up all its gains and dropped to 5,421.72 during the session. It subsequently recovered its losses and closed at 5,683.80, up 0.62% from the previous trading day. The intraday range between the high and low reached 406.41 points. The KOSDAQ also fell below the 700 mark during the session but rebounded to close at 714.95, up 1.50%.
Lee Kyung-min, an analyst at DaishinSecurities, explained, “The KOSPI extended its losses after 10 a.m. in response to a decline in Nasdaq 100 futures as the U.S. midterm election results were being tallied,” adding, “Investor sentiment weakened as concerns spread over tighter regulations on AI data centers and a slowdown in the construction sector, fueled by the growing likelihood of a Democratic victory.”
Although the Democratic Party’s control of both the House and Senate had been a likely scenario even before the election, analysts note that the larger-than-expected margin of victory heightened market caution. Han Ji-young, an analyst at KIWOOM Securities, explained, “While the Democrats’ control of both chambers was a likely scenario based on opinion polls, the fact that they are securing a more overwhelming victory than expected in this election appears to be the cause of the stock market’s sharp decline,” adding, “It seems that stock prices are reflecting concerns that, alongside the deepening of President Trump’s lame-duck status, the data center construction regulations championed by the Democrats could be tightened.”
On that day, SamsungElectronics(005930)(-0.68%) and SK hynix(000660)(-0.14%) plunged during the session but narrowed their losses to close slightly lower. In contrast, the renewable energy and rechargeable battery sectors showed strength as expectations grew that they would benefit from the Democrats’ expanded policy influence. HANWHA SOLUTIONS(009830) Solar-related stocks such as (18.64%), HD HYUNDAI ENERGY SOLUTIONS CO.,LTD.(322000)(12.47%), and OCI Holdings Company Ltd.(010060)(10.38%) posted double-digit gains, while secondary battery-related stocks such as L&F(066970)(12.84%), SAMSUNG SDI CO.,LTD.(006400)(11.57%), ECOPRO BM CO., LTD.(247540)(10.96%), and POSCO FUTURE M(003670)(10.81%) also surged.
◇“Halting or delaying AI investments is a different matter”… Attention also focused on the stabilizing effect of interest rates
However, analysts note that it remains uncertain whether stricter data center regulations will actually lead to a decline in semiconductor demand. Lee Jae-won, an analyst at Yuanta Securities Korea, explained, “Even if the Democratic Party gains control of Congress, it would be difficult to halt AI investment entirely, given the presidential veto power and the strategic importance of the U.S.-China AI hegemony competition,” adding, “We need to distinguish between construction delays caused by stricter regulations and actual cancellations of server and memory orders.”
Yuanta Securities Korea analyzed the potential impact of stricter AI data center regulations on the memory semiconductor market by breaking it down into three scenarios. The firm concluded that even if regulations are tightened, there is insufficient basis to expect a decline in the average selling price (ASP) of memory chips if investment continues. The firm judged that even if some data center projects are postponed from 2027 to 2028, as long as supply shortages persist, the impact would likely be limited to a slowdown in the rate of price increases. On the other hand, the analysis noted that if widespread order cancellations, reductions in purchase commitments, and inventory buildup among customers occur, the possibility of an actual deterioration in memory supply and demand and a decline in prices must be considered.
In terms of interest rates, the report also anticipated positive developments. The analysis suggests that if the Democratic Party gains control of Congress, it could curb the Trump administration’s additional tax cuts and expanded fiscal spending, thereby limiting the increase in U.S. Treasury supply and the upward pressure on long-term interest rates. Stable long-term interest rates could reduce the financing burden on AI companies, helping to alleviate concerns about the sustainability of their investments.
The analyst stated, “Democratic control of Congress could curb the Trump administration’s additional tax cuts and fiscal expansion, thereby limiting the increase in Treasury supply and the upward pressure on long-term interest rates,” adding, “This would help alleviate the fiscal and interest rate uncertainties that have weighed on the stock market this year.”
It was also pointed out that even in sectors expected to benefit from policy measures, it is necessary to distinguish between actual regulatory changes and structural demand. Yuanta Securities Korea analyzed that while expectations for policy benefits may emerge in the renewable energy sector, the restoration of tax incentives could be constrained by the president’s veto power. On the other hand, the firm projected that structural demand for power grids and energy storage systems (ESS) would persist due to the expansion of AI infrastructure.
The analyst recommended, “Investors should focus on themes where structural demand changes are expected to persist, such as AI semiconductors and power infrastructure, while for renewable energy, healthcare, and energy storage systems (ESS), it is necessary to consider the potential for policy benefits resulting from the Democratic Party’s landslide victory.”