"US Equipment Investment Expected to Slow... To Resume After Presidential Election"

Daishin Securities forecasted on the 30th that capital investment in the United States is expected to slow down for the time being. However, it is anticipated that investment will likely resume after the U.S. presidential election.

Lee Ha-yeon, a researcher at Daishin Securities, predicted that corporate capital expenditures in the second half of the year will be limited due to political uncertainty and concerns about an economic recession. He stated, "Ahead of the presidential election, policy uncertainty is expected to cause a slowdown in U.S. capital investment," adding, "In particular, Trump has mentioned the possibility of repealing the Inflation Reduction Act (IRA), so companies have no choice but to wait and see the election results rather than actively investing."

Furthermore, he analyzed that the market’s recent caution about the previously excluded possibility of an economic recession is also a factor contributing to the slowdown in capital investment. The researcher noted, "Premature investment could lead to overproduction and increased inventory burdens, resulting in deteriorated profitability, so companies are cautious about capital expenditures," and added, "In recent earnings reports, concerns have been raised that cloud companies, which had been leading capital expenditure expansion, may face prolonged low returns on invested capital."

However, Lee explained that while delays in capital investment are inevitable until the presidential election, there is a high possibility that investment will resume afterward. He said, "Policy uncertainty will be resolved, and the new government may actively pursue economic stimulus measures," and added, "Above all, the Federal Reserve’s interest rate cuts could lead to a relaxation in financial institutions’ lending attitudes, which would positively impact investment." He continued, "From a long-term perspective, reshoring of manufacturing in the U.S. and continued investment in artificial intelligence (AI) to improve productivity are inevitable," and further noted, "To address the shortage of skilled workers and infrastructure, there will be steady demand for government-led AI infrastructure development to enhance productivity."