FRANKFURT (Reuters) – Germany’s regulator BaFin said financial market corrections were one of the top risks on its radar for 2025, a day after steep losses in technology stocks.
Mark Branson, BaFin’s president, noted there had recently been a “party mood” in the markets.
“And we all know that the bigger the party, the bigger the hangover afterwards,” he said.
Global technology shares recovered somewhat on Tuesday, but remained vulnerable after a rout sparked by the emergence of a low-cost Chinese artificial intelligence model made investors question the sky-high valuation and dominance of AI bellwethers.
The German regulator outlined six top risks for the year, which also included corrections in property markets and corporate loan defaults, all of which were on its 2024 list of top worries.
Branson also highlighted the physical risks of climate change, pointing to the fires in Los Angeles, which would affect the financial sector, including insurers.
(Reporting by Tom Sims and John O’Donnell; Editing by Madeline Chambers and Rachel More)
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