Blue Wave Shock... Nikkei: "Global Stocks Shed 4,800 Trillion Won in a Day"

After the Democratic Party secured control of both chambers of Congress and local governments in the U.S. midterm elections, selling continued, particularly in AI-related stocks, wiping $3.5 trillion (approximately 4,773 trillion won) off the market capitalization of global stock markets in a single day.

According to an analysis by The Nikkei of data from financial data platforms QUICK and FactSet, global stock market capitalization stood at $154 trillion (approximately 21.025 quadrillion won) as of Nov. 5, down $3.5 trillion from the previous day.

Yonhap News Agency

The decline widened further after a market capitalization of 77 trillion yen (approximately 663 trillion won) was wiped out from the Tokyo Stock Exchange Prime Market on Nov. 6. The losses were amplified by the so-called "Blue Wave," triggered by the possibility that the U.S. Democratic Party would regulate the AI industry.

On Nov. 5 local time, all three major U.S. stock indexes plunged, led by AI technology stocks. The tech-heavy Nasdaq Composite closed at 24,315.00, down 1,421.52 points (5.52%) from the previous trading day. In a single day, the market capitalization of Nasdaq-listed companies alone shrank by approximately $2.5 trillion (about 3,400 trillion won), marking the largest daily decline on record. The Dow Jones Industrial Average fell 1,833.06 points (3.44%) to 51,523.06, while the S&P 500 fell 334.89 points (4.36%) to 7,353.73. However, U.S. stocks rebounded on Nov. 6 as bargain hunters entered the market.

Major Asian stock markets also suffered a chain reaction. On Nov. 6, Taiwan's TAIEX plunged 3,736.67 points (8.99%) shortly after opening, marking its largest intraday drop in the history of the Taiwanese stock market. Shares of TSMC, Taiwan's largest company by market capitalization, fell as much as 9.82% intraday, close to the daily lower limit, extending their decline to seven consecutive trading days. In South Korea, Samsung Electronics and SK hynix, the country's leading semiconductor stocks, also weakened in tandem, at one point pushing the KOSPI's total market capitalization down by more than 3,000 trillion won from its peak.

Since OpenAI released ChatGPT in November 2022, global stock market capitalization has grown 1.6-fold. However, analysts say investor sentiment toward semiconductor and AI-related stocks is cooling rapidly as concerns spread that the U.S. Democratic Party may tighten regulations on data centers.

Takayuki Ishibashi, a vice president at Goldman Sachs Japan, said, "Unlike in previous market corrections, it is difficult to see what could drive a swift rebound in stock prices. As a result, investors are increasingly staying on the sidelines or becoming resigned." Another Japanese asset management industry source said, "Buying had concentrated in these stocks as expectations were heavily priced in, so if selling gathers pace, the declines could also be steep."

This content was produced with the assistance of AI translation services.