A Democratic victory at the U.S. midterm elections could weigh on Asia's AI-related stocks, BNP Paribas's William Bratton says in a note. A Democratic sweep could hurt AI sentiment given a greater subsequent focus on AI safety, testing and standards, the analyst says.
A strong Democrat performance could also result in markets pricing in a potential 2028 "blue wave" with the subsequent scope for more substantial AI regulation, he notes. Given the exposure of northeast Asian equities to the U.S.-led AI supercycle, "this could be problematic," he says.
However, as investors focus has already shifted to AI monetization, company earnings will be more important to the performance of the region's tech sector over the near- and medium-terms, he adds.