In a statement released on January 28th, Germany's regulatory authority BaFin highlighted financial market corrections as a key concern for 2025, following significant losses in technology stocks. BaFin's President, Mark Branson, cautioned about the recent exuberance in the markets, stating, "the bigger the party, the bigger the hangover afterwards."
Pointing to a recent sell-off triggered by a new low-cost Chinese artificial intelligence model, global technology shares remained unsettled, raising doubts about the lofty valuations and dominance of AI giants. BaFin's risk assessment for 2025 included corrections in property markets and corporate loan defaults, mirroring concerns from the previous year.
Branson also drew attention to the tangible threats of climate change, citing the recent fires in Los Angeles as a factor that could impact the financial sector, particularly insurers.