{"id":78621,"date":"2025-10-14T21:36:09","date_gmt":"2025-10-14T21:36:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/78621\/"},"modified":"2025-10-14T21:36:09","modified_gmt":"2025-10-14T21:36:09","slug":"experts-split-on-whether-sharemarket-faces-correction-or-crash","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/78621\/","title":{"rendered":"Experts split on whether sharemarket faces correction or crash"},"content":{"rendered":"

But are we on the verge of market meltdown? Experts say maybe, but equally \u2013 maybe not.<\/p>\n

Chris Douglas, partner at Mapua Wealth, said market valuations looked stretched.<\/p>\n

\u201cThere are lots of geopolitical risks out there, but otherwise you could also argue that markets will continue up in the short-term driven off the huge AI spend, inflation largely back to being in the tolerances and interest rates coming down.<\/p>\n

\u201cIf I was a long-term investor, our recommendation is to stay in equities, but remain as diversified as possible, across geographies, sectors and industries.\u201d<\/p>\n

Mike Taylor, founder of Pie Funds, said chatter about a market crash was usually a \u201cclear sign\u201d that it was not going to happen.<\/p>\n

\u201cMarkets have run pretty hot in the six months post \u2018liberation day<\/a>\u2019 and there is certainly some euphoria in the AI, meme stocks area. I would expect these sectors to undergo a fairly decent correction.<\/p>\n

\u201cHowever, nothing has really changed. In my opinion, the market had gotten a little over their skis and as is always the case, needed a pause. That\u2019s perfectly normal in a bull market. Trade war fears were just the catalyst to kick this off.\u201d<\/p>\n

He said any volatility as a result of Trump\u2019s latest moves was not likely to last.<\/p>\n

\u201cYou\u2019ve got to remember there is still large deficit spending going on and rate cuts<\/a>.\u201d<\/p>\n

Rupert Carlyon, founder of KiwiSaver provider Koura, agreed there was nervousness, which he said was due to two reasons.<\/p>\n

\u201cAI euphoria \u2013 where any announcement regarding AI, chip purchases, investment and infrastructure just sends share prices through the roof.<\/p>\n

\u201cAt the end of the day, that\u2019s definitely not helpful. You\u2019re also in a world where some of the chip companies and AMD, OpenAI, Nvidia, they\u2019re all getting pretty circular where you had Nvidia announcing a deal to invest in OpenAI, OpenAI announces a deal to invest in AMD… you go, \u2018Does this make a huge amount of sense?\u2019\u201d<\/p>\n

He said there was also a lot of capacity going into data centres, which was prompting comparisons to the fibre build of the late 1990s, when excess capacity was created, or even the 19th century railways boom.<\/p>\n

\u201cThen of course you\u2019ve got the US shutdown<\/a>, too, because this one potentially drags on for longer than normal. But based on all of that, I still say no, I think the market\u2019s probably not due for a full-blown crash.<\/p>\n

\u201cYou\u2019ve got to come back to the services being offered. When you look at the makeup of the global and US stock market, the companies that are involved and the strength of their balance sheets, that\u2019s the big difference between now and those other crashes.<\/p>\n

\u201cThe biggest investors are all Microsoft, Google, Amazon. These are huge businesses with massive balance sheets where data centres and AI are important and becoming more important, but only a small part of what they do.\u201d<\/p>\n

He agreed with Taylor that forecasts of crashes could be a positive thing.<\/p>\n

\u201cI read some interesting commentary that was saying one of the things that didn\u2019t happen during the railways and didn\u2019t happen during the fibre boom was that there was almost no one saying \u2018this is nuts, this has gone too far\u2019. This time, there\u2019s a lot more noise around warning people.\u201d<\/p>\n

But he said there were now more traders making moves in the economy without a lot of deep research, \u201cwhich is why we see whipsaws\u201d.<\/p>\n

\u201cThat\u2019s why we saw on Friday a 3.5% move… a threat against China doesn\u2019t justify a 3.5% move… at the end of the day it\u2019s because people are jittery on everything else.\u201d<\/p>\n

University of Auckland assistant professor of finance Gertjan Verdickt said there were multiple layers to it.<\/p>\n

He said the VIX index, which is used to assess volatility and market risk, was at levels that would indicate a lot of future volatility.<\/p>\n

He said there was some nervousness in the market, but not at levels that were particularly alarming.<\/p>\n

\u201cIf you look at what investors are saying, for instance crash confidence \u2013 in the US \u2013 you see some elevated numbers, especially among institutional investors. This aligns with the VIX. Not that a crash will happen for sure, but there is some stress around the market.<\/p>\n

\u201cConfidence is still decreasing, but still at a relatively high level, but again coming down.\u201d<\/p>\n

Verdickt said AI was difficult to value, but the average company was profitable and there seemed to be sustainable business ideas behind them.<\/p>\n

\u201cIf there is negative news about future prospects it will have a ripple effect through the economy.\u201d<\/p>\n

He said valuations were high so a correction would not be a strange thing.<\/p>\n

\u201cBut I believe, given the decrease in interest rates, it should come from a negative signal from the overall economy\u2026 We seem to be on \u2018code orange\u2019. I wouldn\u2019t invest in the stock market right now, because it seems a high valuation with a lot of negative backdrops.<\/p>\n

\u201cWill it turn into a huge crash? No. Will there be a correction? I wouldn\u2019t be surprised if it happened.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"But are we on the verge of market meltdown? Experts say maybe, but equally \u2013 maybe not. Chris…\n","protected":false},"author":2,"featured_media":78622,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[138,60953,3549,813,5658,6119,111,139,69,90,691,1125,8692,812,14905],"class_list":["post-78621","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-correction","tag-crash","tag-edmunds","tag-experts","tag-faces","tag-new-zealand","tag-newzealand","tag-nz","tag-on","tag-or","tag-sharemarket","tag-split","tag-susan","tag-whether"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/78621","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=78621"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/78621\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/78622"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=78621"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=78621"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=78621"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}