KOSPI whipsaws as US election shock hits Korea's chip bets

South Korea got a jolt it didn't order. The KOSPI opened higher at 9 a.m., then dove around 10 a.m. when projections pointed to a landslide for the Democratic Party, sinking more than 4% at one point. By 12:30 p.m., with President Trump conceding defeat, the index clawed its way back and held the 5,600 mark. The whiplash tells you everything about how closely Seoul is watching Washington.

The political shake-up in the U.S. Congress means economic policy is about to move, and that spells a long stretch of uncertainty for South Korea's economy. The sharpest edge points straight at semiconductors, the engine of Korean exports. Democrats have pushed for regulation, arguing that AI data centers chew through enormous amounts of electricity and water, harming the environment and heaping the burden onto nearby residents.

That rhetoric has teeth, according to Jung Yong-taek, a researcher at IBK Securities. He noted the Democratic candidate explicitly pledged during the campaign that data center projects could be halted or scrapped altogether. The worry in Seoul is that production and construction disruptions ripple back into South Korean industry, he said.

There's a second problem: South Korea's $350 billion investment pledge in the United States. Its first project, a gas-fired combined cycle power plant in Texas, was built around electricity demand from AI data centers. But Texas just elected a Democratic governor for the first time in 36 years, and the plant's future is now up in the air.

Don't count on tariff relief, either. Seok Byung-hoon, an economics professor at Ewha Womans University, pointed out that tariffs raised during Trump's first term weren't rolled back during the Biden administration. Tariffs, he said, have already settled in as a way to plug the U.S. fiscal deficit, and Congress's expanded power to check Trump doesn't change that math.

One sliver of good news: with a brake now on Trump's fiscal spending, interest rates and exchange rates could settle down. For South Korean companies, that stability would be a welcome assist.