SK Securities "KOSPI is already in an extreme situation... full-scale recovery due to a small catalyst"

SK Securities evaluated on the 9th that the global stock market plunged due to growing concerns about data center construction delays due to the 'blue wave' in which the U.S. Democratic Party won a landslide victory in the midterm elections, saying, "This is an environment in which a large rebound can occur even if small concerns are alleviated."

Researcher Jo Joongi said, “The question about artificial intelligence (AI) investment has expanded from ‘Can you earn as much as you invested?’ to ‘Can you actually execute the planned investment?’” and added, “There are now added concerns that securing power, connecting to the grid, local opposition, and licensing may limit the speed of data center expansion itself.”

He added, “It does not mean that all (data center construction) projects will be halted due to the election results alone, but the market is re-evaluating the feasibility and time required for future expansion plans rather than the investment amount already announced.” He added, “In future market communication by related companies, delivery dates, power connection, customer acquisition schedules, and actual sales conversion speed will need to be confirmed rather than ‘maintaining investment plans.’”

However, there is limited evidence to interpret the recent sharp decline in stocks as a contraction of the economy and credit market, and pointed out that it is closer to "a phase of reassessing the speed of expansion of the AI ​​investment cycle and the stock risk premium."

This is because economic and credit-related indicators are relatively solid, with the increase in non-agricultural employment in the United States last month being announced at 165,000, well above the market forecast (65,000).

Researcher Cho said, “The domestic stock market is already in a dire situation in all indicators, including stock price decline, ratio of rising and falling stocks, valuation, and foreign supply and demand,” and added, “If only a small trigger (catalyst) occurs, prices are expected to recover in all directions.”

This week, after the domestic stock market attempted to rebound early in the week, it was expected that U.S. prices and the performance of AI infrastructure companies would determine the future direction. In particular, regarding the performance announcements of neocloud companies, he pointed out that "there is a possibility that responses and plans for the results of the midterm elections will become more important (rather than the performance itself)."

The US consumer price index (CPI) for October will be announced on the night of the 10th, Korean time, and the performance of neocloud company CoreWeave will be announced on the morning of the 11th.