SFC CEO warns global stock market liquidity drivers receding
Hong Kong Securities and Futures Commission CEO Diana Ngai warned that key factors driving global stock market liquidity over the past year are receding, citing rising sovereign debt, inflation, high borrowing costs, and AI-related risks.
The chief executive of Hong Kong's Securities and Futures Commission (SFC), Diana Ngai, warned on 4 November that the main factors driving global stock market liquidity over the past year are receding. Speaking at a seminar of the International Financial Leaders Investment Summit, Ngai said rising global sovereign debt levels had raised doubts about debt sustainability, and yields on US and French government bonds could remain volatile.
Ngai noted that surging food and oil prices were exacerbating political and social instability around the world, while many countries lacked sufficient monetary and fiscal policy tools to address their problems. Persistent high inflation was pushing up interest rates, she said, and high borrowing costs could persist for an extended period.
The SFC chief also highlighted risks from artificial intelligence, saying large-scale corporate investment in AI-related supply chains, including data centres, was attracting close market scrutiny over returns, leverage, recycling financing and investment concentration. She pointed to a major PHP security vulnerability discovered in the past week as an example of how AI-revealed flaws could evolve into global cybersecurity threats.
Ngai said growing market concerns about AI safety and reliability, as well as dependence on third parties, were fuelling calls to slow the pace of AI development. While noting that major economies such as the United States continued to perform solidly, benefiting from trade, AI and data centre investment that also supported stock markets, she warned that markets expected large companies to spend an average of US$2 trillion annually on AI-related capital expenditure over the next five years.
This concentration of economic and market performance, Ngai said, warranted attention for its potential spillover effects on both equity and credit markets.