US midterm sweep sparks AI stock sell-off on regulatory fears
SMH•UBP reduced its technology-sector hedge while keeping a neutral stance on global equities, citing concerns that Democratic gains in the US midterms could bring tighter regulation and slow AI infrastructure spending. Global equities fell 2.7% last week and semiconductors dropped 12%.
1. Market concerns and positioning
UBP reduced its technology-sector hedge while maintaining a neutral stance on global equities, as Democratic gains in the US midterms fueled concerns that tighter regulation could delay data center construction, increase costs and slow AI infrastructure spending. Global equities fell 2.7% last week, while semiconductors plunged 12%.
2. Other sector views
UBP downgraded healthcare to 2/5 from 3/5, citing stretched valuations after October's 11% rally and profit-taking. It said higher-quality hyperscaler debt remained attractive, with Big Tech bonds carrying their widest premium to the broader investment-grade market since 2003.
