The Zhitong Finance App learned that CICC released a research report saying that the results of the US midterm elections were clear, and that the Democratic Party “swept” both houses of the Senate and the House of Representatives to take back control of Congress. After the election results were announced, major markets in the US and Europe rose and then fell, and the US stock technology sector was clearly under pressure. In the Asia-Pacific market, the stock indexes of Japan, South Korea, and Taiwan declined significantly under pressure to adjust the global AI industry chain. In contrast, the overall resilience of A-shares and Hong Kong stocks is prominent. Looking at the impact mechanism, the impact of the US midterm elections on A-share related industries is mainly transmitted through four paths: geopolitics, trade policy, AI regulation, and industrial policy in other fields, and the fiscal and monetary environment.
CICC's main views are as follows:
The Democratic Party won the full victory in the 2026 US midterm elections
The results of the US midterm elections are clear. The Democratic Party “swept” both houses of the Senate and the House of Representatives and took back control of Congress. On November 3, local time, the US held midterm elections. At the federal level, according to the Associated Press, on the evening of November 3 and the early morning of November 4, the Democratic Party has successively won control of the Senate and the House of Representatives; as of the morning of November 7, Beijing time, the Democratic Party is expected to obtain at least 54 Senate seats (100 seats in total) and about 256 seats in the House of Representatives (435 seats in total). At the state government level, the Democratic Party's governing structure also showed a relatively clear expansion. Multistate's latest statistics show that in this election, the Democratic Party took the gubernatorial positions of the six states of Ohio, Georgia, Iowa, Nevada, Texas, and Alaska from the Republican Party. Among them, there is no shortage of states with traditional advantages of the Republican Party and major energy, manufacturing, and technology centers in the US. Overall, in this midterm election, the coverage and advantage of the Democratic Party's victory at the federal and state levels exceeded market expectations.
The global stock market fluctuated widely after the election. The US stock technology sector adjusted significantly, and the performance of A-shares was relatively resilient
After the election results were announced, major markets in the US and Europe rose and then fell, and the US stock technology sector was clearly under pressure. After the Democratic Party gained control of Congress, on the one hand, the market was positive about its expectations to counterbalance the Trump administration's geopolitical policies and fiscal expansion, control the risk of further escalation of the US-Iran conflict, and ease upward pressure on US bond yields; on the other hand, there are concerns that the Democratic Party may strengthen AI supervision and restrict data center construction at the federal and state levels, thereby dragging down industrial progress and economic growth. Furthermore, the current AI main line lacks new model developments and new demand-side catalysis. The early earnings season raised concerns about the speed of revenue realization and return on capital under the intense capital expenditure of cloud vendors. Due to the intertwining of factors, the market's digestion of relevant expectations is accompanied by relatively obvious fluctuations. In terms of US stocks, the main indices generally rose on November 4; on November 5, the S&P 500/NASDAQ/Dow Jones fell 4.4%/5.5%/3.4% respectively. Among them, the AI industry chain had the highest decline, and the Philadelphia Semiconductor Index fell by more than 12%; the rebound of the AI chain led the S&P 500 index to close slightly higher on November 6. On the European side, the European market and US stocks resonated upward on November 4. Major European indices rose by about 1.8%-2.2%. There was a correction on November 5-6, but the decline was less than that of US stocks.
In the Asia-Pacific market, the stock indexes of Japan, South Korea, and Taiwan declined significantly under pressure to adjust the global AI industry chain. On November 5-6, the Nikkei 225, Korea Composite Index, and Taiwan Weighted Index, which are highly exposed to the global AI industry chain, fell for several days. The cumulative decline reached 7.6%/11.0%/7.6%, respectively. Among them, leading semiconductor stocks such as SK Hynix, Samsung Electronics, Tokyo Electronics, and TSMC had the highest declines. In contrast, the overall resilience of A-shares and Hong Kong stocks is prominent. On November 4-5, the decline in external uncertainty and the increase in the “market stabilization” policy jointly supported a clear rebound in A-shares and Hong Kong stocks; on November 6, due to the sluggish performance of overseas technology topics overnight, there was a correction in the A-share and Hong Kong stock hardware sectors. The A-share GEM Index/Science and Technology Innovation 50 Index fell 4.0% and 2.6% respectively on the same day, but the Shanghai and Shenzhen 300 Hang Seng Index fell by only 1.4% and 1.3%, which is significantly less than the Japanese, South Korea, and Taiwan markets.
How will the US midterm elections affect A-share related industries?
Judging from the pace of impact, the short-term impact of the US midterm elections on A-shares is mainly reflected in valuation adjustments brought about by US policy expectations and market sentiment disturbances. The medium to long term depends on the actual implementation of US policy adjustments and their impact on industry fundamentals. As the new US Congress and new governors of each state take office one after another from the end of 2026 to the beginning of 2027, the relevant impact may gradually become apparent.
Looking at the impact mechanism, the impact of the US midterm elections on A-share related industries is mainly transmitted through four paths: geopolitics, trade policy, AI supervision, and industrial policy in other fields, and the fiscal and monetary environment. Based on the views of CICC Macro and industry analysts, the bank believes that 1) In terms of geopolitics, the US-Iran conflict is one of the important factors dragging down the Republican midterm elections. Under the combined effects of public opinion pressure faced by the Trump administration and the Democratic Party's control of Congress to form institutional restrictions, the risk of further escalation of the US-Iran conflict may decrease, and the short-term valuation or pressure on the A-share oil and gas and shipping sectors, but the sector's subsequent performance still depends on the implementation of the policy, the progress of the US-Iran negotiations, and the actual evolution of the situation. 2) In terms of trade policy, the Democratic Party tends to limit the Trump administration's policy space for unilaterally imposing tariffs to promote more stable and predictable trade policies. Global concerns about the escalation of trade frictions with the US may ease, but the trade environment between China and the US is still uncertain. In the future, we still need to pay attention to changes in the external environment of enterprises in the overseas export chain in the automobile, machinery and equipment industries. 3) In terms of the AI industry, both parties support the development of the US AI industry. The differences are mainly on the strength of supervision and the path of policy implementation. The Democratic Party is inclined to strengthen cutting-edge model safety supervision, and may use the state government to restrict data center construction in terms of electricity costs, tax incentives, and land use. However, relevant legislation at the federal level is still limited by lengthy Senate filibuster (filibuster) and presidential veto (presidential veto). State governments also need to balance the economic benefits brought about by data center investments with residents' energy costs. There is still great uncertainty about the actual implementation of the policy. As far as A-shares are concerned, short-term regulatory expectations may disrupt US AI capital expenditure expectations, putting phased pressure on demand expectations for AI hardware overseas chains, but considering that the progress and extent of implementation of relevant policies are still unclear, and the long-term development of the AI industry still depends on new industry breakthroughs and investment returns. If pricing is excessive in the early stages of the market, the impact of pricing on US policies is excessive, capital expenditure expectations stabilize, or new technologies and demand catalyze. It is expected that targets related to overseas chains will still usher in valuation restoration. On the other hand, if overseas computing power investment slows down in stages, the domestic chain may gain a certain window to catch up, but currently supply chain restrictions on expanding production of domestic computing power hardware still exist, and the ability of related enterprises to realize profits and the extent to which they match the valuation still need to be continuously verified. In terms of new energy, the Democratic Party as a whole is more inclined to support the development of clean energy, which may promote the restoration of the US domestic new energy tax credit policy, which may benefit the A-share power equipment export chain to a certain extent, but there is still uncertainty about trade-related policies. 4) In terms of the fiscal and monetary environment, after the Democratic Party takes control of both houses, the Trump administration's room to further expand fiscal stimulus may be limited; if the AI industry's drive to overall economic growth weakens while the geographical situation eases and inflationary pressure eases, expectations of US monetary tightening are expected to ease marginally, which is expected to support the recovery of gold prices and precious metals sectors. Based on the opinions of CICC industry analysts, the bank further expanded its influence on various sectors. Let's take a look at the details:
The impact of changes in the geographical situation on related industries: the risk of conflict escalation has eased marginally, oil prices and freight rates may fall in the medium term, but they may remain high in the short term
Oil and gas chemicals
Under the benchmark situation of prolonged geographical friction, the recovery of oil production and supply is still facing uncertainty. It is expected that there will be a pulsating recovery, and it may be difficult for the oil price center to fall rapidly in the short term. The CICC Commodity Group predicts that it may still be difficult for Brent oil to fall below the high level of 90 US dollars/barrel in the next 3-6 months [6]. For upstream oil and gas companies, profits under current oil prices are still supported. As for the downstream petrochemicals sector, the profit performance of some leading companies with independent pricing capabilities is relatively good in the context of improving the competitive landscape. Overall, if oil prices do not continue to fall sharply in the short to medium term, the sector's current profit is expected to remain resilient, but next year's growth rate may be affected.
non-ferrous metals
Looking at the overall environment, traditional cyclical demand and supply constraints may still support the sector, but tighter US AI regulations may suppress demand expectations for related metals; priority is placed on gold in terms of allocation, while focusing on incremental demand opportunities brought about by the US NEV industry support policy. On the gold side, marginal decline in geographical risk is expected to reduce inflationary pressure. Combined with tighter AI regulations, it may weaken US economic growth expectations. If this pushes the market's expectations of a slowdown in the pace of the Fed's interest rate hike and a decline in real interest rates increase, it is expected to support the price of gold; however, if the situation recurs, there is still a possibility that the price of gold will fluctuate. At the same time, the current valuation of A-share gold stocks is generally reasonable, and risk aversion in the domestic market may provide further room for valuation improvement. In terms of copper and small metals, AI-related demand currently still accounts for a low share, and the direct impact of stricter regulations on actual demand is limited, mainly affecting long-term demand expectations; some of these small metals have technological valuation properties, and the disturbances may be even more obvious.
Transportation and infrastructure
The easing of the conflict between the US and Iran is expected to put pressure on the valuation of the shipping sector in the short term, but the actual impact on industry fundamentals depends on whether the conflict can be sustained and effectively resolved. If only an armistice agreement without enforcement restrictions is reached, the geographical conflict may still be repeated intermittently, and the freight center will also be higher than pre-conflict levels for a period of time, and industry sentiment is expected to remain relatively high.
AI Regulatory Policy: Data Center Regulatory Expectations Disrupt Overseas AI Chains
Tech hardware
Expectations that AI regulations will become stricter after the US midterm elections have risen, compounded by uncertainty about technology development and commercialization progress, which may push overseas AI capital expenditure expectations down further, putting pressure on the AI hardware industry chain in the short term. Some A-share semiconductor manufacturing core assets have gone through deep adjustments in the previous period. Short-term changes in North American data center construction expectations may change the expected slope of hardware demand, but there is no indication that it will change the long-term sentiment. If overseas AI industry trends are actively catalyzed, or if domestic computing power supply constraints ease, industrial support policies are implemented, and related corporate performance is gradually realized, the AI hardware industry chain is still expected to usher in new investment opportunities.
In terms of overseas chains, short-term AI infrastructure construction is facing headwinds, but the medium- to long-term boom trend is still there. Currently, the overall balance sheets of large overseas cloud vendors are still relatively stable, and the risk of serious overcapacity and sharp price drops is relatively limited. Looking ahead, overseas cloud vendors are expected to maintain active investment in 2027 to support A-share overseas chain demand. In the future, they will mainly focus on industrial catalysis brought about by AI technology breakthroughs and application implementation.
In terms of the domestic chain, if overseas AI investment slows down in stages, it may provide a certain technical catch-up window for domestic computing power. Currently, domestic data center construction is driving strong demand for computing power chips and complete servers, and in the short term, the conflict is still on the supply side. Looking ahead, the supply side is concerned about the progress of capacity expansion and implementation with policy support; the demand side is concerned about the sustainability of the construction of a government computing power center.
Software-based telecommunications and education
Facing rising uncertainty about AI regulations in the US, the model and application layer may be more resilient compared to AI hardware and computing power infrastructure. Overall, the development logic of domestic models and applications has not changed significantly, but we still need to pay attention to computing power supply constraints and the progress of commercialization of AI applications.
At the model level, if overseas regulatory restrictions are substantially strengthened, it may bring relative benefits to domestic models. On the one hand, domestic models mainly rely on domestic computing power infrastructure, and the direct impact of the slowdown in US data center construction on domestic model training and reasoning is relatively limited; on the other hand, if US AI regulations substantially restrict model development and the expansion of computing power infrastructure, it may slow down the development of the US AI industry and create space for Chinese model makers to narrow the technological gap. However, considering that US model makers may still deploy computing power in other regions, and that domestic model makers still face constraints such as difficulties in obtaining high-end computing power cards, high rental costs, and insufficient supply of domestic chips, there is still uncertainty about the extent to which these relatively favorable benefits have been realized. Furthermore, it was noted that price competition among domestic models intensified after entering 3Q26, and overall revenue in the sector slowed. Looking ahead, the pace of iteration of next-generation models is still the key for domestic model manufacturers to maintain competitiveness and gain market share.
At the application level, there has been no significant change in the direction of AI's continuous penetration on the B-side and C-side. The progress of commercialization and the growth rate of demand are still decisive factors in related industries around the world. Meanwhile, due to the high correlation between downstream IT spending and the economic cycle, the A-share software sector's performance in recent quarters has been lackluster.
media
On the media side, after the US midterm elections, regulatory compliance requirements in the field of games going overseas and AI film and television may be further raised; in the long run, the cultural game between China and the US will continue, and the cultural barriers faced by domestic content going overseas may be difficult to resolve quickly in the short term.
In terms of games going overseas, the focus of regulation may shift from “entry barriers” to “refined operation compliance.” In the context of full-process compliance in game development and operation, leading vendors with mature overseas data compliance structures, localized content operations, and legal teams may adapt to rules more quickly and use compliance advantages to increase market share.
In terms of AI film and television, the increase in compliance requirements is mainly reflected in the strengthening of external regulatory restrictions and the acceleration of domestic autonomous substitution. The pace of AI regulation and legislation at the US federal level has accelerated. On the one hand, it has reduced the compliance space for domestic manufacturers to directly use overseas AI tools for large-scale content production, and on the other hand, it has also opened up market space for local alternatives to independent domestic AI content tools and full-process AI production pipelines.
Renewable energy and trade policies: Clean energy support and trade policies are expected to improve marginally, and export chain benefits are still awaiting fundamental verification
New energy for power equipment
The market expects a marginal improvement in US energy and trade policies after the midterm elections, and the decline in clean energy subsidies and marginal easing of import restriction policies are expected to improve overseas demand in China's power equipment and new energy industry chain, but actual progress and pace are still facing great uncertainty. In terms of power grid equipment, the US power infrastructure investment demand has existed for a long time, and the local equipment supply gap is prominent. If the import restriction policy is relaxed marginally, the exports of China's power equipment companies are expected to benefit. On the photovoltaic side, on the overseas demand side, US electricity supply and demand are tight, and the decline in clean energy subsidies may ease, which is expected to drive an increase in demand for photovoltaic power plants, household energy storage and inverters, import restrictions may be adjusted, and the conditions for Chinese related products entering the US market are expected to improve marginally; on the domestic supply side, policies drive the withdrawal of some backward production capacity, and industry supply may begin to shrink in 2027. At the same time, the efficiency advantages of leading companies may become more prominent, and it is expected that they will take the lead in reducing loss/reversing losses. In terms of energy storage, the US policy to guide the clean energy industry chain to accelerate localization is expected to continue. Under the goal of reducing energy costs and controlling inflation, trade barriers may be reduced marginally, opening up more market space for China's energy storage and related equipment. In terms of lithium batteries, the direction of localization of the US lithium battery supply chain has not changed, but considering insufficient support from the local industry, the strength of the FCC (US Federal Communications Commission) policy may be adjusted later; the sector's early adjustments were large, compounded by the recent marginal recovery in domestic energy storage policies, which is expected to usher in an opportunity for a rebound.
Automobiles and travel equipment
The US election results are expected to ease the market's concerns about the further escalation of America's unilateral trade policy, and may be positive about China's automobile sector as a whole. However, there is a strong bipartisan consensus on US restrictions on Chinese automobiles and intelligent driving, and it is unlikely that there will be substantial relaxation in the short term. It is recommended to focus on the following three main lines of investment: First, when parts go overseas, trade policy uncertainty is marginally reduced, which is conducive to the restoration and stability of the global automobile supply chain, and focus on high-quality parts companies with overseas production capacity layout and support capabilities for global customers. Second, in the new energy industry chain, the Democratic Party is relatively active in the transformation of new energy sources. Market expectations for the US new energy policy are expected to improve marginally, and focus on globally competitive battery and electrification component suppliers. Third, independent brands go overseas, and it is still difficult to break through the US market in the short term, but the improvement in the global trade environment is expected to help Chinese car companies promote overseas layout and continue to be optimistic about building leading independent brands with overseas channels, products, and localized production capacity.
Mechanical military
The impact of the US midterm elections on various segments of machinery and equipment was divided. First, tighter AI regulations may suppress US AI infrastructure capital expenditure expectations, putting some pressure on PCB equipment, gas turbines and other related industrial chain links; secondly, the Democratic Party relatively supports the development of clean energy, and new energy equipment such as photovoltaics and wind power is expected to benefit; finally, if the US tariff policy stabilizes or gradually returns to normal, the machinery and equipment export chain is expected to benefit, especially enterprises with high business exposure to the US.
pharmaceuticals
The Democratic Party is relatively active in the development of the pharmaceutical industry. After the midterm elections, the implementation of the US innovative drug price control policy may be marginally relaxed, and improvements in industry research and development and commercialization expectations may be beneficial to China's innovative drug going overseas and the CXO industry chain. In terms of innovative drugs, China's innovative drug research and development capabilities continue to improve, and opportunities for cooperation with large US pharmaceutical companies through license-out (overseas rights authorization) are expected to increase, driving the increase in related licensing revenue. On the CXO side, if the R&D and production activities of innovative drugs in the US improve, demand for drug development and production outsourcing is expected to increase, bringing incremental orders to CXO companies in China. In terms of risk, the proposed rules relating to the “Comprehensive Outbound Investment National Security Act (COINS Act)” (COINS Act) recently announced may restrict some Sino-US biomedical cross-border transactions, but the direct impact on the pure license-out model is currently relatively limited, and we still need to pay attention to whether the scope of supervision will expand in the future.
Risks: repeated or escalating geopolitical conflicts; progress in the AI industry falls short of expectations; changes in US AI regulation, new energy industry policy and trade policy exceed expectations; changes in the Federal Reserve's monetary policy and global liquidity exceed expectations.