Temasek warns of two major market risks in 2027: an AI trade reversal and inflation pushing interest rates higher.

October 7 — Rohit Sipahimalani, Chief Investment Officer of Singapore's Temasek, said that entering 2027, the two major risks facing global markets are a reversal in AI trades and persistent inflation pushing interest rates and bond yields further higher, ultimately triggering a repricing of the stock market. He said, "A reversal in AI trades is the biggest risk," but currently does not believe this risk is imminent.

As of the end of March 2026, Temasek's net portfolio value reached S$518 billion (about US$405 billion), and it plans to increase the share of AI-related investments from about 6% currently to as much as 15% by 2031. However, Sipahimalani said Temasek is increasing the liquidity of its AI investments and plans to raise the proportion of public market assets in its AI exposure from about 50% to 70% to 75%, so that it can adjust positions more flexibly amid rapid industry changes.

He also warned that if inflation persists and drives interest rates and long-term bond yields higher, it could create dual pressure on highly valued stocks and capital-intensive AI projects. Temasek has not changed its long-term bullish stance on AI, but is reducing potential market repricing risk by increasing public market assets and liquidity.