Don’t Panic: Tech Pullback Could Be a Buying Opportunity

Historically, November has been a strong month for equities, with the S&P 500 typically gaining an average of 1.8%, according to the Stock Trader’s Almanac. However, the first full trading week of this November saw markets facing headwinds.

The S&P 500 and Dow Jones Industrial Average each experienced losses exceeding 1%, while the Nasdaq Composite saw a sharper downturn, shedding around 3% – its most significant weekly decline since the 10% slump witnessed in the week ending April 4.

While earlier in the year, trade tensions cast a shadow over the markets, the current concern revolves around the valuation of artificial intelligence (AI) related stocks. Investors are increasingly questioning whether current prices accurately reflect the underlying value and long-term growth potential of these companies.

“The concentration of trillions of dollars in a handful of stocks inevitably raises concerns about a potential bubble,” remarked Tan Su Shan, CEO of DBS, Southeast Asia’s largest bank, speaking to CNBC. This sentiment underscores the apprehension surrounding the sustainability of the AI-driven market surge.

Goldman Sachs’ CEO David Solomon echoed this caution, suggesting that “choppy waters might be ahead.” He anticipates a potential 10% to 20% correction in equity markets within the next 12 to 24 months, speaking at the Global Financial Leaders’ Investment Summit in Hong Kong.

However, market analysts also point out that a correction doesn’t necessarily spell doom. Glen Smith, chief investment officer at GDS Wealth Management, argues that a pullback could present “buying opportunities” for discerning investors, allowing them to capitalize on temporarily depressed prices.

UBS multi-asset strategist Kiran Ganesh noted that earnings have remained “reassuring” despite valuation concerns surrounding tech stocks. This suggests the underlying fundamentals of many companies remain solid, potentially mitigating the severity and duration of any market downturn. The interplay between high valuations and robust earnings will be crucial in determining the market’s trajectory in the coming months.

— CNBC’s Lee Ying Shan, Hugh Leask and Lim Hui Jie contributed to this report.

Mixed Performance Across Major U.S. Indices: The Nasdaq Composite closed 0.21% lower on Friday. However, U.S. futures showed signs of recovery, rising Sunday evening. In Asia, Asia-Pacific markets showed positive momentum on Monday, with South Korea’s Kospi surging by over 3% as of 2 p.m. Singapore time (1 a.m. ET). This divergence in performance highlights the complex interplay of regional and global factors influencing market sentiment.

China Eases Restrictions on Rare Earths: Beijing announced the suspension of some restrictions on exports of rare earth elements. This decision follows recent discussions between U.S. President Donald Trump and Chinese President Xi Jinping on Oct. 30, signaling a potential de-escalation in trade tensions. The move could ease supply chain concerns for industries reliant on these critical minerals.

Nexperia Impasse Shows Signs of Thawing: The Chinese Commerce Ministry stated that steps have been taken to facilitate exports of specific chips from Nexperia’s China facility. This development led to a rise in shares of Nexperia’s parent company, Wingtech Technology, on Monday. The easing of restrictions could indicate a broader trend of reduced trade friction between China and the Netherlands.

U.S. Government Shutdown Approaching Resolution: The Senate passed the initial stage of a deal aimed at ending the government shutdown. Further votes are scheduled for Monday, bringing the agreement closer to finalization. The resolution of the shutdown is expected to restore stability to government operations and provide clarity to the markets.

[PRO] AI-Driven Growth in Select Chinese Sectors: As China’s earnings season progresses, certain AI-related sectors are exhibiting significant growth, with some reporting gains up to 57%. However, intense price competition is impacting other sectors. Investors are closely monitoring these trends to identify opportunities and potential risks within the Chinese market.

Global Wealth Boom Fuels a Surge in Family Office Imposters

The proliferation of wealth globally is creating opportunities for fraudsters and fundraisers to impersonate family office representatives, targeting unsuspecting investors. Some imposters are even motivated by a desire for social status, according to industry veterans who spoke with CNBC.

The opaque nature of the single-family office (SFO) landscape contributes to the problem. In many jurisdictions, SFOs managing only family assets are exempt from registration, making verification challenging and creating an environment ripe for exploitation.

— Lee Ying Shan