KOSPI barely holds 5,000 as data center regulation fears hit South Korea

South Korea's KOSPI index barely held the 5,000-point level on Friday amid growing concerns over potential data center regulations following the U.S. midterm elections, which triggered a sharp selloff in AI-related stocks. U.S. individual investors sold a net $265 million in individual stocks during the decline, the largest since March 2020, as Democratic victories raised fears of delayed AI data center construction, reduced semiconductor orders, and oversupply. Bloomberg Intelligence projected AI infrastructure investment in 2027 could fall 5-7% from earlier estimates, with up to 10 gigawatts of planned data center capacity potentially delayed. Incoming Texas Governor Gina Inohosa pledged to suspend data center operations until protective legislation is enacted, while similar candidates won in Georgia, Ohio, and Michigan. Korean analysts attributed the sharp drop to external shocks and psychological anxiety rather than structural issues in AI technology, noting Korea's heavy semiconductor dependence on the U.S. market. Opinions diverge on whether this is a temporary dip or long-term downturn, though most experts agree AI investment itself has not stalled, with big tech AI cloud revenue still growing nearly 50%.