[Edaily Reporter Shin Ha-yeon ] Domestic power equipment stocks are plummeting for the second consecutive day in the wake of the “blue tsunami”—the Democrats’ sweep of both the Senate and House of Representatives in the U.S. midterm elections. This comes amid growing concerns that orders for transformers and power distribution equipment could be delayed if regulations on the construction of artificial intelligence (AI) data centers are tightened. Even after trading resumed following a temporary suspension due to a KOSPI circuit breaker, major power equipment stocks continued to extend their losses.

As of 10:12 a.m. on the 6th, HYOSUNG HEAVY INDUSTRIES(298040)is trading at 1,518,000 won, down 273,000 won (15.24%) from the previous trading day. LS ELECTRIC(010120)is down 17,800 won (13.71%) to 112,000 won, while HD HYUNDAI ELECTRIC(267260)is down 51,500 won (12.83%) to 350,000 won. ILJIN ELECTRIC(103590)is also trading at 42,350 won, down 13.57%.

During the previous day’s regular trading session, HYOSUNG HEAVY INDUSTRIES fell 12.59%, LS ELECTRIC dropped 13.87%, and HD HYUNDAI ELECTRIC declined 8.44%. Compared to the closing prices on the 4th, as of 10:12 a.m. today, HYOSUNG HEAVY INDUSTRIES has fallen 25.92%, LS ELECTRIC 25.68%, and HD HYUNDAI ELECTRIC 20.18% over the past two days.

Overnight on the New York Stock Exchange, there was heavy selling of tech stocks amid concerns that AI infrastructure investments could be delayed following the U.S. midterm elections. The Nasdaq Composite Index plunged 5.52%, and the Philadelphia Semiconductor Index fell 12.3%. In South Korea, selling pressure also hit power equipment stocks—which, along with semiconductor stocks, had been considered beneficiaries of U.S. data center expansion—as investors offloaded their holdings.

The key factor the market is watching in the power equipment sector is the construction schedule for new data centers. This is because if permits are delayed due to stricter environmental impact assessments or cooling water usage standards, orders for data center distribution panels and distribution transformers could also be postponed. On the other hand, investments in replacing the aging U.S. power grid and building long-distance transmission lines connecting renewable energy generation complexes are cited as factors that will support demand for domestic power equipment manufacturers.

Seong Jong-hwa, an analyst at LS SECURITIES, noted, “If data center permits and construction schedules are delayed, the pace of new orders for data center distribution panels, distribution transformers, and distribution equipment could temporarily slow down.” However, in the medium to long term, he predicted that “the benefits of ‘ultra-high-voltage transmission grid permit reforms’ will outweigh those from data center regulations.” Analysts suggest that if the U.S. power grid permitting process is streamlined, orders for ultra-high-voltage transformers, circuit breakers, and cables—the core products of domestic companies—could remain steady or even increase.

Meanwhile, the KOSPI plunged more than 8% early in the session, falling below the 5,000 mark during intraday trading. The Korea Exchange triggered a Level 1 circuit breaker on the stock market, suspending trading for 20 minutes. After trading resumed at 9:34 a.m., with the Mini KOSPI 200 futures price down 6.77% from the previous trading day, a sell-side sidecar was triggered, suspending the effectiveness of program sell orders for five minutes.