Temasek Warns AI Trade Unwinding Is Primary Market Risk
Temasek identifies the potential unwinding of the artificial intelligence trade as the biggest risk to global markets, though it plans to increase its AI asset exposure.
Temasek Holdings (Private) Limited identified the unwinding of the artificial intelligence trade as the primary risk currently facing global markets. Speaking at the Milken Institute Asia Summit in Singapore, Chief Investment Officer Rohit Sipahimalani stated that while a market reversal is not imminent, volatility could occur by 2027.
Sipahimalani noted that AI earnings momentum has kept the S&P 500 near record highs despite rising Treasury yields, a trend that masks broader weakness in the Russell 3000. He identified potential triggers for a reversal as tighter safety regulations or a failure of customers to generate returns from their AI spending.
Despite these warnings, the state-owned investment firm remains bullish on the long-term potential of the technology. Temasek intends to increase its exposure to publicly traded AI assets to 70% or 75% to maintain the flexibility to pivot as the industry evolves.
