The Monetary Authority of Singapore warns that the technology sector may be overvalued, potentially triggering severe adjustments in global markets.

The Monetary Authority of Singapore has warned that the high valuations of the technology sector pose potential risks. In its annual Financial Stability Review released on Wednesday, the Monetary Authority of Singapore stated, "Some stock market valuations are relatively high, especially in the technology and artificial intelligence sectors... If market optimism about the future returns from artificial intelligence wanes, it could trigger a more widespread sharp correction in the stock market and result in more defaults in the private credit market." The authority pointed out that most of the stock market gains have been driven by AI-related investments, leading many investors to significantly increase their exposure to the information technology sector. Some large technology companies are using new, and possibly unsustainable, private funding structures to support their expansion, creating greater revenue pressures for some AI firms. The divergence between stock market valuations and the risk of economic growth downturn continues, suggesting that once a shock occurs, the market could experience disorderly adjustments.