Singapore, 24 October 2025 – Global equity markets are racing higher, but more analysts are increasingly cautioning that the surge could be more than just an extended bull run. Rather, they warn, it may signal a bubble that is waiting to burst.
In Singapore and throughout Asia, investor optimism has been buoyed by strong gains in technology stocks, particularly those tied to the buzz around artificial intelligence (AI). The eight largest U.S. technology companies alone now account for nearly 40 % of the U.S. stock-market value, according to strategist firm Schroders.
At the same time, the ratio of the S&P 500’s forward-earnings multiple has climbed to levels last seen at the height of the dot-com era.
Global policy-makers are also ringing caution bells:
- Bank of England’s Financial Policy Committee stated that equity valuations appear stretched and that the “risk of a sharp market correction has increased.”
- The International Monetary Fund (IMF) warned that price-to-fundamental models show risk-asset prices have moved ahead of underlying fundamentals, suggesting potential for broad asset repricing.
- Banking-industry heavyweights like JPMorgan Chase & Co. have flagged what they see as early warning signs of speculative excess.
In Asia-Pacific markets, the ripple effects could be particularly significant. Many regional investors mirror global themes, especially in tech and growth stocks, meaning that a sharp correction abroad may transmit swiftly into regional markets, potentially resetting valuations, investor sentiment and financing conditions.
Key risk-factors to watch:
- If AI expectations prove over-optimistic or the companies leading the charge fail to deliver on growth, sentiment may reverse sharply.
- A rising U.S. dollar, higher interest rates or tighter global liquidity could challenge equity valuations, particularly in Asia where global flow dynamics matter.
- Market concentration in a few mega-cap stocks and sectors implies that any crack in the leadership could cascade more broadly, a characteristic of prior bubbles.
- In regions like China, analyses suggest the current bull run may be decoupled from underlying domestic growth, raising vulnerability to a swift correction.
Notably, not all analysts believe the situation constitutes a classic bubble. For example, Goldman Sachs continues to argue that the AI revolution may still be in its early innings and that fundamentals—such as productivity gains from AI adoption, could justify elevated valuations.
For Asian investors, the message is clear: while positive momentum remains, the margin for error may be narrowing. Diversification, valuation discipline and Scenario planning for a correction may be more important now than ever.
