Greed is outpacing fear in world financial markets as investors respond to the pandemic recovery, Goldman Sachs chief executive David Solomon said.
Goldman Sachs Group CEO David Solomon said that markets may face a difficult time in the future, as the global economy seeks to emerge from the sudden impact of the pandemic.
“I think markets generally when I step back and I think about my 40-year career, there’s been periods of time when greed has far outpaced fear,” Solomon told the Singapore event.
“We were in one of those periods of time and generally speaking, my experience says that, you know, those periods are not long-lived.” Solomon said the expectation of rising interest rates could reduce the heat in some asset markets.
Global markets rallied during the Coronavirus pandemic, spurred by massive stimulus that also boosted profits at banks such as Goldman Sachs.
Concern is now growing that accelerating inflation will pose a challenge to a sustainable recovery as it may have to
Central banks to raise interest rates to absorb this wave.
“Chances are interest rates will move up and that will take some of the exuberance out of certain markets,” he said.
Goldman is at the forefront of a campaign by global banks to gain a bigger foothold as the Chinese market opens, and is battling to reap billions of dollars in potential profits.
Last month, the group obtained approval to acquire full ownership of a 17-year joint venture in securities brokerage.
The company plans to double its workforce in China to 600 and increase its asset and wealth management base.
““I think China wants to grow its capital markets, they want more listing activity in Hong Kong and onshore,” Solomon said.
The participation of global institutions “strengthens their capital markets and so my guess is they’ll continue to support that, but the world can change,” he said.
In a related context, international reports revealed that inflation once again was the main driver of the market this week, as the U.S. consumer price index reached its highest level in 30 years, which increased speculation that the Federal Reserve would start raising interest rates sooner rather than later.
Treasuries lost all maturity levels on the yield curve and stocks closed the week lower amid rising inflation.