‘Buckle up, we’re in for a volatile ride’
Tan Su Shan is the CEO and director of DBS Group.
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As valuations on the U.S. stock market grow increasingly strained, the chief executive of Southeast Asia’s largest bank is warning investors to expect turbulence ahead.
“We’ve seen a lot of volatility in the markets. It could be stocks, it could be rates, it could be foreign currencies.” DBS CEO Tan Su Shan added in a statement to CNBC that he expects volatility to continue.
Tan, who took over the reins of DBS from long-time CEO Piyush Gupta in March, said investors were particularly concerned about high valuations of artificial intelligence stocks, the so-called “Magnificent Seven”.
Magnificent Seven — Amazon, Alphabet, Meta, Apple, Microsoft, Nvidia And Tesla’s – Some of the key U.S. tech and growth stocks that have driven much of Wall Street’s gains in recent years.
“For example, you have trillions of dollars tied up in seven stocks. So concerns about that kind of concentration are bound to arise. ‘You know, when is this bubble going to burst?'”
At the Global Financial Leaders’ Investment Summit held in Hong Kong earlier this week, There would likely be a 10-20% decline over the next 12 to 24 months.
Morgan Stanley CEO Ted Pick said at the same summit that investors should welcome periodic pullbacks and that these are healthy developments rather than signs of crisis.
Tan agreed. “Obviously a correction would be healthy,” he said.
Recent examples include: Advanced Micro Devices And palantirBoth reported stronger-than-expected quarterly results on Tuesday, but their respective stocks and the broader Nasdaq fell.
His words came after similar warnings International Monetary Fund and central bank governors Jerome Powell and Andrew Bailey have warned about inflated stock prices.
Singapore as a diversification play
Tan advised investors to diversify their assets rather than concentrating them in a single market. “Diversify, whether in your portfolio, your supply chain, or your demand distribution.”
Tan, who has more than 35 years of experience in banking and asset management, said Asia could attract more investment from the US and that this is not a bad thing.
Pointing out the efforts of Singapore and the country’s central bank to increase interest in local markets, Tan described the city-state as a “diversifying market”.
“We have the rule of law. We’re a transparent, open financial system and we’re politically stable. We’re a good place to invest. So I don’t think we’re a bad place to consider diversifying your investments.”
