Southeast Asia's largest bank is sounding the alarm on U.S. market concentration. DBS CEO Tan Su Shan warns investors to brace for continued volatility as trillions remain tied up in just seven AI-powered tech giants, with a potential 10-20% correction looming over the next two years.
DBS CEO Tan Su Shan isn't mincing words about what's coming next for global markets. Speaking to CNBC, the chief of Southeast Asia's largest bank delivered a stark warning that has investors reconsidering their AI-heavy portfolios.
"We've seen a lot of volatility in the markets. It could be equities, it could be rates, it could be foreign exchange," Tan told reporters, adding that she expects the turbulence to continue indefinitely. Her concerns center on something that's been keeping finance chiefs awake at night - the dangerous concentration of wealth in artificial intelligence stocks.
The so-called Magnificent Seven - Amazon, Alphabet, Meta, Apple, Microsoft, Nvidia, and Tesla - have become the backbone of Wall Street's recent gains. But that success story is starting to look more like a house of cards to banking veterans like Tan.
"You've got trillions of dollars tied up in seven stocks, for example," she explained during her interview. "So it's inevitable, with that kind of concentration, that there will be a worry about 'when will this bubble burst?'" The math is sobering - these seven companies now represent roughly 30% of the entire S&P 500's market capitalization.
Tan's warning comes fresh off her appointment as DBS CEO in March, taking over from longtime leader Piyush Gupta. Her 35 years in banking and wealth management give weight to concerns that Wall Street's AI euphoria has pushed valuations beyond reasonable limits. Recent earnings reactions prove her point - both Advanced Micro Devices and Palantir posted stronger-than-expected quarterly results last Tuesday, yet their shares still tumbled alongside the broader Nasdaq.
The Global Financial Leaders' Investment Summit in Hong Kong this week painted an even grimmer picture. Industry leaders are now openly discussing a 10-20% market drawdown over the next 12 to 24 months. Morgan Stanley CEO Ted Pick tried to put a positive spin on the outlook, calling periodic pullbacks "healthy developments rather than signs of crisis." Tan agreed, stating bluntly: "Frankly, a correction will be healthy."
