The biggest risks for the global stock market next year are the possibility of a reversal in artificial intelligence (AI) investments and inflation driving up bond yields, according to a recent assessment.

Rohit Sipahimalani, Chief Investment Officer (CIO) of Singapore's state-owned sovereign wealth fund Temasek International, stated at the Milken Institute Asia Summit 2026 held in Singapore on the 7th local time, "The biggest risk is a downturn in the AI trade, and while it may not happen immediately, there is a sufficient possibility of a shock occurring in 2027."

He also pointed to inflation as another core risk factor.

Sipahimalani said, "Inflation moves in tandem with the interest rate environment, which means there is a risk that it will eventually trigger a tipping point for the stock market at some stage."

Bloomberg reported that such debates are intensifying ahead of the U.S. earnings season, which will gauge whether the hundreds of billions of dollars in AI capital expenditures poured in by big tech companies will translate into corporate earnings.

The global bond market has been showing weakness as rising energy prices and increased demand for government debt heighten the possibility of additional interest rate hikes by central banks.

Temasek, owned by the Singapore government, held 518 billion Singapore dollars (approx. 550 trillion won) in assets as of the end of March, and has previously announced plans to increase its AI investment share from the current 6% to 15% by 2031.

Temasek has generated high returns by securing stakes in companies such as OpenAI, Anthropic, and Nvidia.

CIO Sipahimalani also expressed his intention to raise the proportion of public market investments within Temasek's AI portfolio from the current level of around 50% to 70–75% in order to respond swiftly to market changes.

During a panel discussion, Carlos Obeid, Chief Financial Officer (CFO) of Abu Dhabi's sovereign wealth fund Mubadala, said, "A few years ago, Asia accounted for about 10% of our portfolio, but it has now grown to 13%, and we will further increase investments in China, South Korea, Japan, and India."

(Photo: Capture from the Temasek website)