Temasek Chief Investment Officer warns: AI trading reversal is the biggest market risk, turbulence may occur in 2027
Temasek's CIO stated that AI-driven trading reversals represent the greatest market risk, with possible turbulence in 2027; however, he remains optimistic in the long term and plans to raise public AI exposure to 70%—75%.
Golden Ten Data APP has learned that Singaporean state-owned investment giant Temasek stated that a reversal in artificial intelligence trading is the greatest risk facing the market.
Temasek Chief Investment Officer Rohit Sipahimalani said, "We don’t see this as an imminent issue, but could there be volatility in 2027? Yes, it’s possible."
Sipahimalani said that even if US Treasury yields rise sharply, AI remains one of the key factors supporting US stocks near record highs, noting that large companies related to this technology are delivering strong earnings performance.
He pointed out that despite rising borrowing costs, the S&P 500 Index is still hovering near record highs, supported by "AI and the earnings momentum surrounding the leading players."
However, the strength of the index masks underlying weakness. Sipahimalani noted that about half of the components in the Russell 3000 Index have fallen at least 20% from their June peaks, highlighting how much the market’s resilience relies on a handful of winners.
He said a reversal in AI trading could be triggered by multiple factors, including safety concerns that lead to regulatory tightening or signs that clients’ investments in this technology are not generating sufficient returns.
Nevertheless, Temasek remains long-term bullish on artificial intelligence and continues to increase its investments in this field. Sipahimalani said about half of the company’s current AI exposure is allocated to publicly traded assets, ideally aiming to raise this proportion to around 70% to 75%.
Compared to private assets, which are harder to exit quickly, this will give Temasek greater flexibility to adjust investments as the industry evolves.
"One thing we recognize is that AI is an extremely fast-moving environment where things can easily change, and you have to be able to pivot," he said.
Temasek has invested in private AI model developers such as OpenAI and Anthropic, but "the scale of exposure in these areas is different from some areas where we have greater flexibility," said Sipahimalani.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Jane Dunlevie appointed as Co-Head of TMT Investment Banking at Goldman Sachs (GS.US)
According to reports, Jane Dunlevie, a star investment banker who became a Goldman Sachs partner at age 35, has been appointed as Co-Head of TMT (Technology, Media, and Telecom) Investment Banking, according to an internal Goldman Sachs memo.
Bitwise Makes Biggest XRP Purchase in October
Japan shares extend losses as rate uncertainty, geopolitical woes curb appetite
Updates with closing prices By Satoshi Sugiyama TOKYO, Oct 8 (Reuters) - Japanese shares fell more than 1% on Thursday, down for a second consecutive session, as investors paused after recent rallies, wary of the US rate outlook, higher yields and geopolitical tensions. The Nikkei 225 Index .N225 fell 1.42% to close at 69,042.11, while the broader Topix .TOPX slid 1.51% to 4,091.46. "Japanese shares had risen at a rapid pace through yesterday, and profit-taking has since picked up. That selling pressure appears to be continuing today," said Hiroki Takei, strategist at Resona Holdings. Japanese AI-related shares were subdued even after Samsung Electronics 005930.KS, the world's largest memory chipmaker, projected a nearly ninefold jump in third-quarter operating profit from the same period last year. Shares of chipmaker Rohm 6963.T lost 5.19%, the biggest percentage drag in nearly a month, while technology investor SoftBank Group 9984.T shed 4.28% and Tokyo Electron 8035.T dropped 2.48%. Concerns over US monetary policy remained in focus after Federal Reserve minutes released on Wednesday showed most participants signalling another rate hike by year-end. Market participants remained wary of French and Italian debt markets, with rising energy prices and fiscal concerns keeping sentiment fragile. Geopolitical tensions also dampened risk appetite, as increased attacks on shipping in the Gulf and the Strait of Hormuz fuelled concerns over Middle East oil supplies and pushed crude prices higher. Breadth was negative, with 165 decliners in the Nikkei 225 against 56 advancers and four unchanged. The largest percentage losers in the Nikkei were semiconductor silicon wafer supplier Sumco 3436.T, down 5.73%, followed by construction machinery maker Komatsu 6301.T, down 5.52%, and agricultural machinery and equipment maker Kubota Corporation 6326.T, down 5.42%. The largest percentage gainers were cybersecurity software company Trend Micro 4704.T, up 3.89%, followed by IT consulting firm Nomura Research Institute 4307.T, whic
Third largest since 2008! US stocks saw single-week outflows of $11 billions, technology stocks hit hardest
Last week, institutional investors significantly sold off individual stocks, resulting in a net outflow of $11.0 billion from the U.S. stock market. Funds were mainly withdrawn from the technology sector, marking the third largest single-week outflow from individual stocks in the history of Bank of America's statistics.
Crypto prices
More
