[Financial News] South Korea’s stock market plunged amid growing concerns that the Democratic Party’s gains in the US midterm elections could lead to tighter regulation of artificial intelligence (AI) data centers, prompting the ruling party and government to hold emergency talks on the 6th. The government decided to introduce emergency measures to prevent excessive forced liquidations and consider additional steps to stabilize the market. However, some expect the impact on South Korea’s semiconductor industry to be limited, as US AI regulations are unlikely to last given the US-China technological rivalry. The Democratic Party of Korea held an emergency meeting on “stabilizing financial markets and protecting investors” at the National Assembly that day to review the causes of the stock market plunge and possible responses. Convened at the party’s request, the meeting was attended by Democratic Party leader Kim Min-seok, floor leader Han Byung-do, Deputy Prime Minister for Economic Affairs Lee Hyoung-il, Financial Services Commission Chairman Lee Eog-weon, and Financial Supervisory Service Governor Lee Chan-jin, among others. Kim said experts believed “growing concerns about a slowdown in investment in AI data centers after the US midterm elections were the main cause,” and assessed that “the structural characteristics of South Korea’s stock market, where certain industries such as semiconductors make up a large share, amplified the scale of fluctuations.” Earlier, at a meeting of the party’s supreme council, he also called for action, saying, “There should be no artificial stimulus, but if necessary, we must take swift and decisive measures to stabilize the market.” The government first decided to waive securities firms’ obligation to maintain a 140% collateral ratio on margin loans for three months starting on the 9th, in order to prevent a chain of forced liquidations triggered by the sharp drop in stock prices. Deputy Prime Minister Lee said, “We will closely monitor excessive investor anxiety and imbalances in supply and demand, and prepare further measures if volatility increases further.” The market unease stems from concerns that investment could slow after Democratic candidates who pledged to introduce regulations won in areas slated for major AI data center construction in the United States. The analysis is that concerns that a decline in data center construction could also reduce demand for AI semiconductors spread into weakness in global technology stocks, also jolting South Korea’s stock market. However, some observers believe it is unlikely that US AI regulations will actually slow the industry’s growth. At a meeting on the US midterm elections hosted that day by the NEAR Foundation, Kim Byeong-yeon, a professor in the Department of Economics at Seoul National University, said, “Data centers are at the heart of the US-China technological power rivalry,” adding, “If the United States cannot build many data centers, it will fall further behind China in the competition.” Professor Kim predicted, “Voters or the Democratic Party may be calling for regulation now, but over time they will recognize that this is a matter of national survival.” He explained that even if data center construction is restricted, technological workarounds are possible, such as linking smaller facilities or shifting to on-device AI. It was reported that views favoring a robust outlook for South Korea’s semiconductor industry through next year also predominated at a separate government meeting with semiconductor experts. Democratic Party lawmaker Lee Yong-woo told reporters after a closed-door party-government meeting, “Concerns about a slowdown in investment were raised after Democratic candidates won in areas where major AI data centers are planned in the United States, but there was a view that the federal government plays a major role and that the influence of state governments would be limited.” The ruling party and government agreed to keep a close watch on market conditions over the weekend and hold further consultations if necessary. Kim called for a stern response to unfair trading that exploits market volatility, price manipulation, and the spread of false information. Floor leader Han also stressed, “We will deploy every available policy tool to stabilize the market and ease investor anxiety.” [email protected] Jiwon Song Reporter