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[US Midterm Election: Congressional Changes Impact Asset Pricing] ⑴ Market participants are assessing the impact of Tuesday's midterm elections on the change of control in Congress, paying close attention to whether a Democratic victory will amplify asset volatility. The AI trading sector is a core theme in the market. ⑵ The current market is inherently fragile, and the previous correction in the AI sector has already exacerbated investor anxiety. The election results may further amplify this risk-averse sentiment. ⑶ The election results will have policy implications for several sensitive sectors, including AI computing infrastructure, US fiscal planning, defense spending, and regulatory trends in areas such as healthcare and banking. ⑷ Polls indicate that Democrats are highly likely to win the House of Representatives, while the Senate race is very close, with different institutions providing multi-scenario probability assessments. ⑸ Citi strategists believe there are two possible outcomes for the Senate: a Republican victory could boost the stock market, while a Democratic victory could suppress it. ⑹ UBS team estimates that the probability of Democrats winning both the House and Senate is about 50%, the probability of Democrats winning the House and Republicans retaining the Senate is about 40%, and the probability of Republicans retaining both houses is about 10%. (7) UBS's Chief Investment Officer noted that the change in congressional control will strengthen oversight, and negotiations on fiscal issues will become more difficult. (8) If the Democrats control Congress, the AI industry may face stricter scrutiny, and computing power projects will face greater public pressure, but institutions predict that strong restrictive legislation is unlikely to be introduced in the short term. (9) Historical statistics show that since 1970, the S&P 500 index has mostly risen in the six months following midterm elections. (10) In terms of options trading, the market has not bet on a sharp market movement after the election; the implied volatility of the index the following day is only slightly higher than the monthly average. (11) Traders indicated that there will be short-term fluctuations after the results are released, but various uncertainties will not be eliminated all at once, and geopolitical risks will persist. (12) Election-related hedging arrangements may fail; investors still need to continuously monitor subsequent policy signals.