Temasek International's Chief Investment Officer has pointed out that an AI-driven pullback, along with inflation pushing up bond yields and bringing an end to the stock market rally, are the foremost risks facing global markets next year.

Temasek International Chief Investment Officer Rohit Sipahimalani said: "The unwinding of AI trade positions is the biggest risk. We do not think it will erupt immediately, but the market is very likely to experience turbulence in 2027."

Speaking on Wednesday at the 2026 Milken Asia Summit in Singapore, Sipahimalani said another core issue is "inflation-related concerns." He said: "The inflation risk combined with changes in the interest rate environment means the stock market may face a tipping point at some stage. AI and inflation are, in my view, the two key risks for 2027."

With the U.S. earnings season approaching, market debate is intense. The earnings reports will be an important test: whether the hundreds of billions of dollars in AI-related spending by tech giants can be converted into higher profits. Rising energy prices and government debt issuance needs have led the market to bet that central banks will raise interest rates further to curb inflation, causing global bonds to fall.

As of March 31 this year, the state-owned investment institution Temasek managed assets of 518 billion Singapore dollars (equivalent to 405 billion U.S. dollars). Temasek has committed to raising the share of AI-related investments from 6% to as much as 15% by 2031, more than doubling the increase. AI is already a major source of returns for the institution, which holds stakes in industry leaders such as OpenAI, Anthropic, and Nvidia.