Seoul stocks face fresh uncertainty as Democrats retake US Congress

As Democrats secured control over both the Senate and the House of Representatives in the U.S. midterm elections, Korean stocks faced mounting policy uncertainty, according to market analysts reporting on Wednesday. The analysts pointed out potential hurdles in extending corporate tax cuts and the likelihood of more stringent oversight for Big Tech and artificial intelligence (AI) businesses, which could lead to increased volatility in Korea's tech-driven stock market.

However, they emphasized that substantial policy shifts appear improbable, given U.S. President Donald Trump's veto power and capacity to enact executive orders. In the medium term, Korean stocks are anticipated to be propelled more by returns from AI investments, semiconductor demand, and foreign investment flows rather than the election results themselves.

The KOSPI index ended the day marginally higher after a turbulent trading session, as investors weighed the ramifications of the Democrats' triumph. After a 2.24 percent increase in the prior session, the benchmark index opened at 5,786.13, up 137.34 points, or 2.43 percent. It subsequently surged to a high of 5,828.13, marking a 3.17 percent gain, before experiencing a reversal, dropping as much as 4.02 percent to 5,421.