Korean Chip Stocks Slide 4% in Premarket as US Democrats Sweep Congress
Korean chip stocks fell 3-5% in premarket Thursday after Democrats swept Congress, reviving fears of US data-center curbs.
South Korea's biggest semiconductor stocks opened 3% to 5% lower in premarket trading Thursday, after Democrats won both chambers of the US Congress in the midterm elections, raising fears of tighter rules on AI data centers.
Samsung Electronics (005930.KS) and SK hynix (000660.KS) were down 3% to 5% from the previous session as premarket trading opened at 8 a.m., according to Nextrade. SK Square (402340.KS), the parent of SK hynix, and Samsung Electro-Mechanics (009150.KS) were also down about 3% to 4%, leaving most of the market's largest stocks weaker before the open. KOSPI night futures closed down 1.66%, adding to caution ahead of the regular session.
The move echoed a split that appeared in US markets on Wednesday. The Dow Jones Industrial Average jumped 3.03% to close at 53,356.12, the S&P 500 rose 1.58% and the Nasdaq Composite gained 1.44%, as the Democratic sweep fed expectations of an early end to the war with Iran. West Texas Intermediate crude fell 8.29% to $88.12 a barrel and the 10-year US Treasury yield dropped to as low as 4.88%, lifting the broader indexes.
Semiconductor and data center supply chain stocks went the other way. Micron fell 7.0% and Nvidia dropped 3.2%, while the Philadelphia Semiconductor Index lost 3.13% to its lowest level in six months. Neocloud names were hit harder: Hut 8 fell 23.2%, IREN 11.2% and CoreWeave 9.9%. Large cloud providers rose on expectations that a slower build-out would ease capital spending, with Microsoft up 6.7%, Amazon up 6.1% and Alphabet up 3.2%.
Democratic candidates who campaigned on data center regulation won in Texas, Georgia and other states where new facilities are concentrated, raising concerns that companies will bear higher costs for power grid expansion and face permitting delays.
Some analysts played down the risk. Han Ji-young, an analyst at Kiwoom Securities, said nationwide regulation faces significant obstacles given the presidential veto and US AI competitiveness, and that investment schedules already underway will not be seriously disrupted. The recent slide has brought the chip sector's forward price-to-earnings ratio to 2.71 times and its price-to-book ratio to 1.28 times, meaning much of the bad news is already priced in, he said.
In delayed trading, Nvidia (NVDA) was down 3.17% at $200.13, Micron (MU) down 7.00% at $795.23, Microsoft (MSFT) up 6.68% at $555.80, Amazon (AMZN) up 6.12% at $266.03 and Alphabet (GOOGL) up 3.18% at $288.93.