Temasek warns of two major market risks in 2027: AI trading reversals and inflation-driven interest rate hikes.

Singapore sovereign wealth fund Temasek’s Chief Investment Officer Rohit Sipahimalani has identified two major risks facing global markets by 2027: a reversal in the AI trade, and persistent inflation driving further increases in interest rates and bond yields that would ultimately trigger a repricing of stock markets. He called “a reversal in the AI trade the biggest risk,” but noted he does not currently believe this risk is imminent. As of the end of March 2026, Temasek’s net portfolio value reached S$518 billion (roughly US$405 billion), and the fund plans to raise its AI-related investment allocation from the current ~6% to a maximum of 15% by 2031. However, Sipahimalani said Temasek is boosting the liquidity of its AI investments, with plans to lift the share of public market assets in its AI exposure from around 50% to 70-75% to enable more flexible position adjustments amid the fast-evolving sector. He also warned that if inflation persists and pushes interest rates and long-term bond yields higher, this could exert dual pressure on high-valuation stocks and capital-intensive AI projects. Temasek has not altered its long-term bullish stance on AI, but is mitigating potential market repricing risks by increasing holdings of public market assets and improving liquidity.