TechFlow, November 5 — The Monetary Authority of Singapore (MAS) warned that elevated valuations in the technology sector have become a potential risk. In its annual Financial Stability Review released on Wednesday, MAS stated, "Valuations in parts of the equity market are relatively high, especially in the technology and artificial intelligence sectors... If investor optimism about AI generating sufficient future returns were to reverse, it could trigger a broad-based market correction and lead to increased defaults in the private credit market." The authority noted that much of the stock market's gains have been driven by AI-related investments, significantly increasing many investors' exposure to the information technology sector. Some large tech firms are using novel, and potentially circular, private funding structures to support expansion, placing greater revenue pressure on certain AI companies. Equity valuations continue to diverge from downside risks to economic growth, implying that if shocks occur, markets may experience disorderly adjustments. (Jinshi)
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