On the 14th local time, the International Monetary Fund released the latest issue of the Global Financial Stability Report. The report pointed out that multiple risks such as rising trade policy uncertainty, expansion of non-bank financial institutions, and pressure on the bond market are intertwined, combined with serious overvaluation of asset prices, which will significantly increase the probability of "disorderly market adjustment." The International Monetary Fund urges central banks to remain highly vigilant about tariff and inflation risks.
The International Monetary Fund believes that in the face of the impact of U.S. tariff policy, market resilience mainly comes from expectations of monetary easing policies in developed economies. However, this market optimism belies the potential damage from tariffs and the government's massive debt.
The International Monetary Fund in six months According to the Global Financial Stability Report, “the valuation model suggests that the price of venture capital is much higher than the baseline, increasing the likelihood of disorderly adjustments in the event of a negative shock.”The report noted that stock markets and corporate credit valuations were “significantly stretched,” especially as market concentration reached a record high driven by AI concept stocks. Once expected returns cannot support high valuations, “sudden and drastic adjustments” may occur.
The International Monetary Fund’s Assistant Director of Monetary and Capital Markets:At present, the phenomenon of "asset valuation being pulled up" has appeared all over the world. Compared with our last report released in April, the asset valuation of some fields and countries has been raised more obviously. You mentioned technology stocks in the field of artificial intelligence. Taking the United States as an example, the current valuation level has returned to a "stretched" high level. While not at pre-dot-com levels, it is getting close.
The International Monetary Fund’s Assistant Director of Monetary and Capital Markets:We also see risks of “market concentration” rising, with a handful of stocks driving the whole market, which are worthy of caution. We believe that the current valuation is indeed high. While it is not directly predicted that sudden sharp adjustments will occur, the higher the valuation, the greater the scale of adjustments will occur. Therefore, whether monetary policy, fiscal policy or regulatory policy, policymakers should pay attention to these changes.