Tan Su Shan is CEO and Director of DBS Group.
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The chief executive of Southeast Asia’s largest bank is warning investors to expect turmoil ahead as U.S. stock market valuations continue to rise.
“We’re seeing a lot of volatility in the market. It could be stocks, it could be interest rates, it could be currency.” DBS CEO Tan Hsu Xiang told CNBC, adding that he expects this volatility to continue.
Tan, who took over the reins of DBS from longtime CEO Piyush Gupta in March, said investors were particularly concerned about the high valuations of artificial intelligence stocks, particularly the so-called “Magnificent Seven.”
Magnificent Seven — Amazon, alphabet, meta, apple, microsoft, Nvidia and tesla – These are some of the major 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 in seven stocks. So when you have that much concentration, it’s inevitable that there’s some worry. ‘When is this bubble going to burst?’
At the Global Financial Leaders Investment Summit in Hong Kong earlier this week, participants said a drawdown of 10% to 20% is likely over the next 12 to 24 months.
Morgan Stanley CEO Ted Pick said at the same summit that investors should welcome periodic pullbacks, saying they are a healthy development rather than a sign of crisis.
Tan agreed. “Frankly, orthodontics is healthy,” she says.
A recent example is advanced micro device and Palantirboth reported better-than-expected quarterly results on Tuesday, but their stock prices and the broader Nasdaq fell.
His comments follow similar warnings from the International Monetary Fund and central bank chiefs Jerome Powell and Andrew Bailey, who have warned about soaring stock prices.
Singapore as a diversification strategy
Mr Tan advised investors to diversify their stock holdings rather than concentrating them in one market. “Just diversify, whether it’s your portfolio, whether it’s your supply chain, whether it’s your demand distribution.”
Mr Tan, who has more than 35 years of experience in banking and asset management, pointed out that Asia has the potential to attract more investment from the US, and that is not a bad thing.
Mr Tan cited the country’s central bank’s efforts to increase interest in Singapore and the local market, describing the city-state as a “diversified market”.
“We have the rule of law. We have a transparent and open financial system and we are politically stable. We are a good place to invest. So I don’t think we are a bad place to think about diversifying your investments.”
