The heads of Goldman and Morgan Stanley allowed a correction of at least 10%. They are not concerned

Markets could experience a correction of more than 10% over a period of 12 to 24 months, Goldman Sachs and Morgan Stanley executives warned at a summit in Hong Kong, CNBC writes . After the 2025 rally, which is being fueled by the AI boom and Fed policy easing and not stopped by a government shutdown, it will be a "reality check," the channel said.

"It is likely that global stock markets will sag 10-20% over the next 12-24 months. Everything goes up and then pulls back a little bit so investors can reassess the situation," Goldman Sachs CEO David Solomon said at the Global Financial Leaders Investment Summit in Hong Kong.

Solomon admitted that "multiples of technology companies have already reached their limit", but this, in his estimation, does not apply to the whole market. At the same time, he believes that pullbacks are normal for long-term bull markets. "Declines of 10-15% happen quite often, even during periods of general growth," said the investment bank head. - This is no reason to change basic ideas about how you allocate capital".

He said Goldman still advises clients to stay in the market by only adjusting their portfolio structure rather than trying to guess the moment to enter or exit.

Morgan Stanley CEO Ted Pick, speaking at the same session, agreed that investors should view temporary pullbacks as healthy and not as signs of an impending crisis, Bloomberg reports.

"Yes, markets look expensive ... but in reality systemic risks have probably diminished," he said, however, recalling the lingering threat of US Federal Reserve policy errors and geopolitical uncertainty. Peek said that in 2026, investor focus will shift to corporate earnings and the market will see an increased dispersion of results, with strong companies outperforming the market and weak companies lagging. He added that the market for new offerings is active globally and investors are willing to take risks.

"We should be calm about corrections of 10-15%, which occur without serious macroeconomic shocks. This is a healthy and natural process for the market", - explained the head of Morgan Stanley.

Both bankers noted that Asia may become one of the most promising areas in the coming years, which is facilitated, among other things, by the trade agreement between the U.S. and China. Goldman estimates that global investors will remain interested in the Chinese market. Morgan Stanley also remains optimistic about China, as well as Japan and India, noting their unique growth stories. Peek cited corporate governance reforms in Japan and infrastructure development in India as long-term investment themes. In China, he highlighted the artificial intelligence, electric vehicles and biotechnology sectors.

The warnings of two influential financiers came amid growing investor concern over high stock valuations. Particularly because of these concerns on November 4 fell quotations of Palantir Technologies, one of the key benchmarks of the sector of artificial intelligence, indicates CNBC. Despite a strong report published the day before, the company's shares lost more than 7% on the premarket, pulling futures on major indices. Exchange-traded contracts on the S&P 500 fell by 1%, futures on the Nasdaq 100 - by 1.4%.

The S&P 500 index is up more than 35% from its April lows, Bloomberg notes . It trades with a P/E multiple of 23, compared with the five-year average of 20. The Nasdaq 100, which is more heavily weighted in technology companies, has a multiple of 28, and was around 19 in 2022.

This article was AI-translated and verified by a human editor