‘Surge → Plunge → Rebound’ KOSPI runs wild… “Is it because of the landslide victory of the U.S. Democratic Party that exceeded expectations?”

The domestic stock market, which started strong thanks to the rebound in U.S. semiconductor stocks, plunged more than 4% during the day and then recovered the loss, showing a 'roller KOSPI' market.

According to the Korea Exchange and Yonhap Infomax, a financial information service provider, on the 4th, KOSPI closed at 5,683.80, up 35.01 points (0.62%) from the previous day.

The index, which started at 5,786.13, up 2.43%, soared to 5,828.13 (+3.17%) immediately after opening, and immediately began to return the increase.

KOSPI, which continued to widen its decline even after eventually turning downward, once fell by 4.02% to 5,421.72, but quickly recovered the loss from around 1:30 p.m. and turned to strength.

The stock prices of Samsung Electronics and SK Hynix, which ranked first and second in market capitalization in the domestic stock market, also fluctuated strongly.

Samsung Electronics [005930], which soared nearly 4% in the early hours of the market, fell 5.24% to KRW 208,000, and SK Hynix [000660], which also showed a rise of around 5%, fell 6.80% to KRW 1.303 million, but ended regular trading after making up most of the decline.

Foreigners, who had been net buyers until immediately after opening, net sold 2.5 trillion won in the stock market, dragging down the index. On the other hand, individuals and institutions made net purchases of 1.1442 trillion won and 1.136 trillion won.

Starting this morning, Korean time, the Nasdaq futures index suddenly plummeted, sending a chain of shocks across stock markets in major Asian countries.

Accordingly, Japan's Nikkei 255 index expanded its intraday decline to -4.84% and ultimately closed at 62,188.63, down 1.42%.

Taiwan's stock index also showed a sharp drop of around 3%, but narrowed the decline and closed at 42,948.91, down 0.83%.

The Nasdaq 100 futures index once expanded its decline to -2.44%, but has now recovered most of the decline.

Artificial intelligence (AI) and semiconductor stocks were strong on the New York Stock Exchange last night, and after the market closed, AMD and Super Microcomputer (SMCI) posted good results, so investors responded with embarrassment at the sudden stock market fluctuation.

This is because the crushing defeat of the Republican Party led by current President Donald Trump in the U.S. midterm elections was predicted long ago.

Some even speculate that the Trump administration and the Republican Party are in a 'lame duck' situation, highlighting the possibility of disruption in the processing of the federal budget.

The US government's budget is currently a provisional budget (CR), which expires on the 11th of next month. If a valid formal budget is not processed or the temporary budget is not extended before the end of the fiscal year (the end of September next year), government functions may be suspended (shutdown).

It is possible that this was stimulated by concerns that President Trump may launch a 'election objection' by claiming election fraud.

Some on Wall Street have been wary of a worst-case scenario in which President Trump disobeys the election results and further accelerates the war with Iran if the Democratic Party wins a landslide victory.

In fact, on this day, KOSPI stopped falling and began to rebound after news broke that President Trump had announced his intention to accept the results of the midterm elections and cooperate with the Democratic Party through an interview with the New York Times.

Concerns that regulations related to AI data centers may be strengthened, led by the Democratic Party, may also have been the background.

Han Ji-young, a researcher at Kiwoom Securities, said, "It may not be easy to understand why stock prices are falling like this even though the Democratic Party's control of the Senate and House of Representatives was the likely scenario according to opinion polls. I think the reason for the plunge is that the Democratic Party is overwhelming the Republican Party more than expected."

He said, “If the Democratic Party overwhelmingly controls the Senate and House of Representatives, concerns that data center construction regulations proposed by the Democratic Party may be strengthened along with Trump’s lame duck deepening appear to be reflected in stock prices.”

Seo Sang-young, managing director of Mirae Asset Securities, said, "Now that the vote count has reached the halfway point, the Democratic Party's overwhelming victory in both the Senate and the House of Representatives is becoming more clear, and public opinion opposing development and delaying development is also winning in regional special referendums surrounding data center construction."

According to the results of the data center-related referendums held in about 10 states, including Ohio and Illinois, the opposing public opinion was dominant in most cases.

Managing Director Seo explained, "With the Democratic Party taking control of the National Assembly, policy discussions that burden development companies, not general consumers, with the cost of data center power grid expansion may be strengthened. This stimulated the issue of delays in data center construction, increasing uncertainty in the semiconductor industry, which caused the Korean stock market to turn significantly lower."

However, Managing Director Seo pointed out that the market's reaction was excessive as this trend was already known and the Democratic Party's victory was expected.

Managing Director Seo said, "If it is confirmed that the scope of the regulation bill being passed is limited and that there is no significant change in Big Tech's AI investment plan, a rebound is expected, especially in the semiconductor industry, which has recently plummeted."