Global Markets React to AI Valuation Concerns

Tesla shareholders have approved a record-breaking pay package for Elon Musk, potentially worth nearly $1 trillion, contingent on the company achieving significant milestones over the next decade. The deal was approved by 75% of votes despite criticism over its scale. Musk must drastically raise Tesla's market value and achieve targets such as deploying a million self-driving Robotaxi vehicles. The approval comes amid concerns over Tesla's financial performance and the polarization of Musk's persona.

Asia-Pacific markets fell on Friday, tracking Wall Street's tech-led sell-off, with declines in artificial intelligence stocks weighing down U.S. averages. China's October trade data missed expectations, with exports plunging 1.1% and imports growing only 1%. Japan's Nikkei 225 index tumbled 2.03%, while South Korea's Kospi plunged 3.1%. The sell-off was driven by concerns over lofty valuations in AI stocks, with major AI companies such as Nvidia, Microsoft, and Palantir Technologies experiencing significant declines.

The article discusses the current state of the tech industry, highlighting the challenges faced by tech investors and employees. It mentions that the technology sector was the hardest hit in terms of job losses in October, with 33,281 cuts, almost six times September's total. The article also notes that U.S. markets tumbled on Thursday, and Asia-Pacific markets fell on Friday, as tech stocks retreated. The Nasdaq Composite fell by 1.9% due to concerns that stock prices are too high. The article also touches on other news, including India's alleged halt on buying Russian oil, China's contracting exports, and SoftBank Group's significant loss in valuation.

DBS CEO Tan Su Shan warns investors to expect market volatility due to stretched U.S. valuations, particularly in AI stocks like the 'Magnificent Seven'. She advises diversification and positions Singapore as a stable hub for investment. Other banking leaders, including Morgan Stanley CEO Ted Pick, share similar concerns about market pullbacks.

Tesla CEO Elon Musk stated at the company's annual shareholders meeting that Tesla will likely need to build a 'gigantic' semiconductor fabrication plant to meet its growing demands for artificial intelligence and robotics chips. Currently, Tesla relies on contract chipmakers like Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Electronics, and is also considering working with Intel. Musk emphasized that even with the best-case scenario for chip production from suppliers, it won't be enough to meet Tesla's needs. The proposed 'Tesla terra fab' would initially have a capacity of 100,000 wafer starts per month, scaling up to 1 million. Musk highlighted Tesla's shift towards AI and robotics, announcing the production of the Cybercab, an autonomous electric vehicle, and expressed his vision of AI and robotics potentially increasing the global economy by a factor of 10 or 100.

European markets opened higher on Friday despite concerns over AI valuations, with the pan-European Stoxx 600 index rising 0.2%. The gains were led by France's CAC index, Italy's FTSE MIB, and Germany's DAX, while the U.K.'s FTSE 100 fell 0.2%. Investors are awaiting earnings reports from several major companies and economic data, including Germany's import and export data and the U.K.'s House Price Index. The Bank of England's governor signaled that rate cuts are coming, with economists pricing in a pre-Christmas rate cut. Asian markets fell overnight, tracking Wall Street's tech-led sell-off, with Japan's Nikkei 225 index down 2.03%.

The US stock market experienced a downturn on Thursday, with major technology names such as Nvidia, Advanced Micro Devices, Tesla, and Microsoft posting significant declines. The Nasdaq Composite dropped 1.9%, while the Dow Jones Industrial Average closed lower by almost 400 points. The S&P 500 is down 1.8% week to date. Despite this, some market participants remain hopeful that an end to the US government shutdown and a potential December interest rate cut from the Federal Reserve could alleviate the pain in US stocks. Tesla shareholders approved Elon Musk's $1 trillion pay plan, while other stocks like Airbnb and Affirm saw gains in extended trading after reporting strong quarterly results.

The article discusses how investors, particularly those outside the US, have become increasingly hesitant to invest in US assets due to President Donald Trump's tariffs policies and unpredictable White House policy. This trend, dubbed the 'Trump Dump,' has led to a rise in demand for international diversification and portfolios that exclude US equities. Experts cite factors such as the concentration of the US stock market, particularly in the 'Magnificent 7' stocks, and disagreements with the US government's policies as driving this trend. While some experts believe investors are diversifying away from US assets, others argue that investors are simply hedging their bets rather than completely abandoning US assets.

China's exports unexpectedly fell in October, marking the first decline in eight months, due to a continued slide in prices for many of its key exports such as cars, solar panels, and batteries. Despite a trade war with the US and rising tariffs in other countries, China's exports had continued to boom, with the physical volume of exports growing rapidly. However, the overall value of exports is not keeping pace due to significant discounts offered to overseas buyers. China's exports to various regions, including the EU, Latin America, Africa, and Southeast Asia, all weakened in October. The trade surplus with the US remains significant, and there are signs that Chinese companies are bypassing US tariffs by rerouting goods through other countries.

China's exports fell in October 2025 as firms waited out the Xi-Trump summit and trade war tensions, with outbound shipments declining 1.1% year on year to $305.35 billion, missing forecasts. Imports rose 1% to $215.28 billion, also falling short of expectations. The trade surplus was $90.07 billion. Analysts attributed the decline to the fading boost from front-loading shipments to avoid US tariffs and the appreciation of the yuan. Exports to the US continued to fall, declining 25.2% year on year. However, recent high-level talks between China and the US have eased tensions, paving the way for a de-escalation of the trade war.

The CEO of Invesco, Andrew Schlossberg, has stated that investor migration from deposits to Asian markets is gathering speed. Schlossberg believes that Hong Kong and mainland China will continue to be the growth engine for asset-management companies as local and international investors shift from holding cash to investing in equities and bonds in the region. He attributes this trend to a combination of interest-rate cuts and confidence in markets, with the macroeconomic and market outlook having more clarity this year. Schlossberg notes that there are a lot of cash deposits held by people in China that will find their way into the markets, citing Invesco's joint venture Invesco Great Wall in China as an example.

Tesla shareholders have approved a massive compensation package for CEO Elon Musk, worth nearly $1 trillion, contingent on meeting ambitious performance targets. The package, approved by over 75% of shareholders, will grant Musk over 25% of Tesla's stock if he achieves specific milestones, including a market capitalization of $8.5 trillion and selling 20 million electric vehicles. Musk's stake in Tesla will expand as he meets these targets, but he is restricted from selling his shares for 10 years and will not receive a salary or bonus. The deal has sparked debate among investors, with some expressing concerns over the package's size and potential dilution of shares.