The chief executive of Southeast Asia’s largest bank, DBS, has warned investors to brace for turbulence in global markets, saying that valuations in U.S. equities—particularly among top artificial intelligence-driven stocks—have become dangerously stretched.
“We’ve seen a lot of volatility in the markets. It could be equities, it could be rates, it could be foreign exchange,” DBS CEO Tan Su Shan told CNBC in an interview. “And I think that volatility will continue.”
Tan, who took over from longtime DBS chief Piyush Gupta in March, said the global financial environment is now in a “fragile equilibrium,” where rising geopolitical tensions, shifting monetary policy expectations, and excessive investor optimism could easily disrupt stability.
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She singled out the “Magnificent Seven”—Amazon, Alphabet, Meta, Apple, Microsoft, Nvidia, and Tesla—as examples of extreme concentration risk in the market, noting that their combined valuations have inflated to levels that could unsettle investors if any one of them falters.
“You’ve got trillions of dollars tied up in seven stocks,” Tan said. “So it’s inevitable, with that kind of concentration, that there will be a worry about, ‘You know, when will this bubble burst?’”
The Magnificent Seven, which have led Wall Street’s rally over the past two years, now make up roughly 30% of the S&P 500’s total market capitalization. Analysts have described their dominance as both a sign of technological leadership and a warning flag for potential market distortion, as smaller firms and sectors struggle to attract capital.
Tan’s remarks came days after several top financiers, including Morgan Stanley CEO Ted Pick, addressed similar concerns at the Global Financial Leaders’ Investment Summit in Hong Kong. At the event, industry leaders agreed that the rally in U.S. tech stocks had become “disconnected from fundamentals,” with some warning that a 10% to 20% correction could occur within the next 12 to 24 months.
Pick told the summit that investors should “welcome periodic pullbacks,” calling them “healthy developments rather than signs of crisis.” Tan echoed that sentiment, saying, “Frankly, a correction will be healthy. Markets can’t keep going up forever.”
The anxiety has already begun to surface in trading. Earlier this week, shares of Advanced Micro Devices (AMD) and Palantir Technologies both fell despite posting stronger-than-expected quarterly results, dragging the Nasdaq index lower. Analysts described the sell-off as a sign that investors may finally be reconsidering sky-high valuations, especially in sectors tied to artificial intelligence and cloud computing.
Her warning also aligns with recent alerts from the International Monetary Fund and central bankers like U.S. Federal Reserve Chair Jerome Powell and Bank of England Governor Andrew Bailey, who have each cautioned that markets are underpricing risks and overstating future earnings growth. The IMF, in its October financial stability report, noted that equity valuations in major economies have outpaced underlying profitability, calling the trend a potential precursor to disorderly repricing.
Beyond valuation risks, Tan highlighted the interplay between monetary policy and equity performance. The prolonged period of high interest rates in the U.S. and Europe has started to weigh on liquidity-sensitive assets, while uncertainty about when the Federal Reserve will begin rate cuts has injected further instability into global portfolios.
In her remarks, Tan emphasized the importance of diversification—not only across asset classes but also geographically. She also argued that Asia offers compelling opportunities for investors seeking a balance between growth potential and macroeconomic stability.
“Whether it’s in your portfolio, in your supply chain, or in your demand distribution, just diversify,” she advised.
Singapore, Tan noted, stands out as an increasingly attractive hub for global investors seeking diversification amid rising uncertainty in Western markets. She credited the city-state’s regulatory transparency, strong governance, and open financial system for boosting investor confidence.
“We’ve got rule of law. We’re a transparent, open financial system and stable politically,” Tan said. “We’re a good place to invest… So I don’t think we’re a bad place to think about diversifying your investments.”
Tan’s comments mirror a broader narrative emerging among Asian policymakers who believe the region can serve as a counterbalance to Western volatility. Singapore, in particular, has seen growing inflows of wealth management assets and family offices, driven by investors looking to hedge against market instability in the U.S. and Europe.
As investors weigh how long the current tech rally can last, Tan believes the global financial system is entering a period where resilience will depend less on chasing momentum and more on managing concentration risk. With geopolitical tensions, inflation pressures, and rate uncertainties still lingering, DBS’s new chief is urging investors to look beyond short-term optimism and position for the inevitable adjustment ahead.