The US Democratic Party's wild victory! Asian AI stocks become cash machines, funds are transferred into automobile and consumer stocks

The U.S. Democratic Party won a landslide victory in the midterm elections. Investors were worried that the development of the artificial intelligence (AI) industry might be affected. On the 5th, they abandoned semiconductor stocks and switched to long-term undervalued stocks such as automobiles and consumer goods. Asian semiconductor stocks such as Samsung Electronics and SK Hynix suffered particularly deep declines.

On the 5th, the stock prices of South Korea's two major memory chip manufacturers, Samsung Electronics and SK Hynix, plummeted 7.6% and 9.5% respectively, causing the South Korea Composite Stock Price Index (KOSPI) to close down 5.3%; the stock price of Software Bank, the major shareholder of the US AI startup company, closed down 6.8%, semiconductor equipment manufacturer Tokyo Velocity Technology fell 9.4%, Advantest plummeted 14.7%, causing the Nikkei 225 index to close down 1.8%.

Investors are increasingly concerned that data center construction could face delays as Democrats pander to voters' fears about AI during the midterm elections. The decline in technology stocks prompted investors to turn to automobile, consumer and other stocks whose stock prices have been undervalued for a long time. Toyota Motor's stock price closed soaring 16.7% on the 5th, and Hyundai Motor also rose 3.5%.

Tim Waterer, chief market analyst at KCM Trade, said: "Funds are continuing to flow out of chip manufacturers, reflecting that the market is punishing the area most vulnerable to potential regulatory risks, which is the semiconductor industry."

The U.S. midterm election results have heightened concerns among investors, who are already anxious about the huge debt accumulated to build AI infrastructure and doubt whether the returns from the technology will justify the investment. In the past month, the Bloomberg Asian Chip Manufacturers Index has fallen by more than 20%.

Takehiko Masuzawa, head of equity trading at Philipcapital Japan, said: "Long-term investors such as global macro funds, sovereign wealth funds and active retirement funds appear to be reallocating funds from growth stocks, including AI concept stocks, to value stocks." He said that once long-term funds begin to turn, this trend will not be easy to reverse.