Following the Democratic Party's victory in the U.S. midterm elections, concerns over increased regulation of the artificial intelligence (AI) industry have led to a dramatic loss of approximately $4.8 trillion in global stock market capitalization in just one day. The sell-off primarily affected AI-related stocks, causing turmoil not only in the U.S. but also in South Korea, Japan, and Taiwan.
According to an analysis by Japan's Nihon Keizai Shimbun (Nikkei) using data from financial analytics firms Quick and FactSet, the total market capitalization of global stock markets was recorded at $154 trillion (approximately 21,250 trillion won) as of November 5. This represents a decrease of $3.5 trillion (about 4,773 trillion won) from the previous day.
This sharp decline is attributed to the so-called 'Blue Wave Shock,' following the Democratic Party's acquisition of majorities in both the House and Senate, as well as control over local governments. There are expectations that the Democrats may strengthen regulations on the AI industry, including data centers, which has dampened investor sentiment toward related technology stocks.
On November 5, the Nasdaq Composite Index fell by 5.52% on the New York Stock Exchange. The S&P 500 and Dow Jones Industrial Average also dropped by 4.36% and 3.44%, respectively. Notably, the market capitalization of Nasdaq-listed companies decreased by approximately $2.5 trillion (around 3,400 trillion won), marking the largest single-day decline on record. However, on November 6, a wave of bargain hunting led to a rebound.
Asian markets were also affected. On November 6, the Tokyo Stock Exchange's Prime Market saw a loss of about 77 trillion yen (approximately 663 trillion won) in market capitalization. The Taiwan Weighted Index recorded an intraday drop of 8.99%, the largest decline ever, while shares of semiconductor giant TSMC fell by as much as 9.82% early in the session.
In South Korea, shares of Samsung Electronics and SK Hynix plummeted. The KOSPI closed at 5,059.69, down 6.02% from the previous trading day. The total market capitalization of the KOSPI fell by more than 3,000 trillion won compared to its peak.
The upward momentum in the stock market, which had been driven by AI-related stocks, has now stalled. Since OpenAI unveiled ChatGPT in November 2022, the global stock market capitalization has increased by about 1.6 times. However, the potential for policy changes regarding the AI industry in the U.S. has intensified selling pressure on semiconductor and data center-related companies.
Market analysts are expressing concerns about the possibility of further declines. Takayuki Ishibashi, a vice president at Goldman Sachs, stated, "Given the current situation, it is difficult to expect any catalysts for a rapid rebound in stock prices, leading to a sense of resignation among investors."
* This article has been translated by AI.
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