Higher costs of capital due to AI and fiscal risks could test financial system: MAS

Kwan Wei Kevin Tan09-22 05:00

Record bond issuances by hyperscalers and elevated sovereign financing needs have resulted in intense competition for global long-term capital, says the Monetary Authority of Singapore.The surge in AI...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2669984126?lang=en_US&edition=fundamental","thumbnail":"","is_english":true,"pubTime":"2026-09-22 05:00","share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","id":"2669984126","market":"nz","top_or_hot":-1,"title":"Higher costs of capital due to AI and fiscal risks could test financial system: MAS","media":"Kwan Wei Kevin Tan","content":"<div>\n<p>Record bond issuances by hyperscalers and elevated sovereign financing needs have resulted in intense competition for global long-term capital, says the Monetary Authority of Singapore.The surge in AI...</p>\n\n<a href=\"https://www.theedgesingapore.com/news/economic-outlook/higher-costs-capital-due-ai-and-fiscal-risks-could-test-financial-system-mas?utm_source=Blog&utm_medium=RSS&utm_campaign=Tiger_Brokers_app_RSS\">Source Link</a>\n\n</div>\n","source":"edge_highlight","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Higher costs of capital due to AI and fiscal risks could test financial system: MAS</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nHigher costs of capital due to AI and fiscal risks could test financial system: MAS\n</h2>\n\n<h4 class=\"meta\">\n\n\n2026-09-22 05:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.theedgesingapore.com/news/economic-outlook/higher-costs-capital-due-ai-and-fiscal-risks-could-test-financial-system-mas?utm_source=Blog&utm_medium=RSS&utm_campaign=Tiger_Brokers_app_RSS><strong>Kwan Wei Kevin Tan</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Record bond issuances by hyperscalers and elevated sovereign financing needs have resulted in intense competition for global long-term capital, says the Monetary Authority of Singapore.The surge in AI...</p>\n\n<a href=\"https://www.theedgesingapore.com/news/economic-outlook/higher-costs-capital-due-ai-and-fiscal-risks-could-test-financial-system-mas?utm_source=Blog&utm_medium=RSS&utm_campaign=Tiger_Brokers_app_RSS\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"ARTY","symbol_name":"ISHARES FUTURE AI & TECH ETF","start_time":0,"source_url":"https://www.theedgesingapore.com/news/economic-outlook/higher-costs-capital-due-ai-and-fiscal-risks-could-test-financial-system-mas?utm_source=Blog&utm_medium=RSS&utm_campaign=Tiger_Brokers_app_RSS","article_id":"2669984126","we_media_id":null,"thumbnails":[],"rights":{"source":"edge_highlight","url":"https://www.theedgesingapore.com/news/economic-outlook/higher-costs-capital-due-ai-and-fiscal-risks-could-test-financial-system-mas?utm_source=Blog&utm_medium=RSS&utm_campaign=Tiger_Brokers_app_RSS","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2669984126","pubTimestamp":1790024400,"columns":[],"sourceInfo":{"source_id":"edge_highlight","name":"Edge"},"weMediaInfo":null,"summary":"Record bond issuances by hyperscalers and elevated sovereign financing needs have resulted in intense competition for global long-term capital, says the Monetary Authority of Singapore.","collect":0,"end_time":0,"defaultTopTitle":"theedgesingapore.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"ARTY":"ISHARES FUTURE AI & TECH ETF","DECU":"AllianzIM U.S. Equity Buffer15 Uncapped Dec ETF","VOTE":"TCW Transform 500 ETF","BK4099":"汽车制造商","LU0170899867.USD":"EASTSPRING INVESTMENTS WORLD VALUE EQUITY  \"A\" (USD) ACC","LU2413665964.HKD":"BNP PARIBAS AQUA \"C\" (HKD) ACC","BK4555":"新能源车","AGIX":"通用人工智能 ETF-AGIX","LU1620156213.USD":"BNP PARIBAS AQUA \"C\" (USD) INC","LU1165135440.EUR":"BNP Paribas Aqua Classic Cap EUR","BK4588":"碎股","BK4086":"建筑产品","VTHR":"Vanguard Russell 3000 ETF","LU2413666004.HKD":"BNP PARIBAS AQUA \"CRH\" (HKDHDG) INC","LU1721427968.SGD":"BNP PARIBAS AQUA \"CRH\" (SGDHDG) INC","PMDE":"PGIM S&P 500 Max Buffer ETF - December","AIPO":"Defiance AI and Power Infrastructure ETF","LU1596574779.USD":"BNP PARIBAS AQUA \"C\" (USDHDG) ACC","LU1543694498.USD":"法巴水资源基金RH MD Dis","QTOC":"Innovator Growth Accelerated Plus ETF - October","BK4585":"ETF&股票定投概念","FSR":"菲斯克","MAS":"马斯科","SG9999001440.SGD":"United Global Dividend Equity Fund A SGD Dist","LU1620156130.USD":"BNP PARIBAS AQUA \"C\" (USD) ACC","CHAT":"ROUNDHILL GENERATIVE AI & TECHNOLOGY ETF"},"translate_title":"人工智能和财政风险导致的资本成本上升可能会考验金融体系：MAS","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"QTOC":1.5,"VOTE":0.6,"PMDE":0.6,"FSR":1,"CHAT":1.5,"AGIX":1.5,"VTHR":1.5,"ARTY":1.5,"AIPO":1.5,"MAS":1,"DECU":0.6},"content_text":"Record bond issuances by hyperscalers and elevated sovereign financing needs have resulted in intense competition for global long-term capital, says the Monetary Authority of Singapore.The surge in AI-related investments, growing fiscal pressures, as well as recurrent energy and supply shocks have resulted in a higher cost of capital, says the Monetary Authority of Singapore (MAS) in their annual Financial Stability Review (FSR) on Sept 22.\nThe FSR is coordinated and prepared by the Macroprudential Surveillance Department of MAS's Economic Policy Group. The FSR contains the analyses and results from the regular assessments MAS conducts on the risks and vulnerabilities that could affect the stability of Singapore's financial system.\nIn their report, MAS notes that the capital-intensive nature of the AI investment cycle has added pressure to an already uncertain macroeconomic environment. Besides competing against sovereign bond issuances for investor capital, AI is putting a strain on semiconductor and electricity capacity, thus fuelling inflation.\nIn addition, advanced economies such as the US are facing rising long-term nominal and real sovereign yields due to higher borrowing needs, stronger investment demand, and higher-term premia.\nEnergy price pressures and diminishing supply buffers due to the ongoing conflict in the Middle East have contributed to the inflationary pressures as well. This is on top of trade policy uncertainty that is reconfiguring supply chains and raising business costs.   \n\"A persistently higher cost of capital could test global financial resilience,\" says the MAS. \"Higher yields would raise sovereign debt-servicing costs, with spillovers to firms and households, while weighing on asset valuations. Abrupt shifts in interest rate expectations could trigger sharp asset repricing, amplified by elevated leverage, maturity mismatches and concentrated exposures, including in AI-related sectors.\"\nEven though AI has been a key driver of economic activity and corporate earnings globally, the MAS notes that an elevated cost of capital as well as increasing dependence on market financing will result in a higher hurdle rate for AI investment.\n\"A material shortfall in earnings or expected returns could trigger a broader reassessment of AI-related valuations, with losses propagating across public equity, corporate bond and private credit markets,\" the MAS says. \"Elevated leverage, concentrated exposures and existing redemption and refinancing pressures in private credit could deepen spillovers to the broader financial system.\"\nTo assess the risks that a retrenchment in AI-related investments and energy supply disruptions could have on the economy, the MAS has conducted stress tests on Singapore's corporate, household, banking and non-bank financial institution (NBFI) sectors.\nOverall, the tests show that most Singapore corporates and households have strong balance sheets that can withstand the shock on earnings, incomes and financing costs. Banks have adequate capital buffers to weather the downturn while NBFIs such as insurers and investment funds have sufficient capital and liquidity buffers respectively.\nAccording to the MAS, robust earnings from local bank groups have helped to bolster their capital strength. Nonetheless, it adds that banks should still continue to maintain sound risk management practices and healthy provisioning buffers amid the uncertain macroeconomic environment.\nAI: A double-edged sword?\nSingapore's economy grew by 5% in 2025, according to data from the Ministry of Trade and Industry, higher than most developed countries. Selena Ling, chief economist and head of global markets research and strategy at the Oversea-Chinese Banking Corporation (OCBC) previously told The Edge Singapore that AI has been a key driver for Singapore's economic outperformance.\n\"If you look at the highest level of growth in the second half of last year and this year, you are really talking about the whole AI boom, and that has nothing to do with state backing or domestically-driven engines,\" Ling says.\nIn fact, the AI boom and the insatiable demand for chips to power it has altered Singapore's trading relationships. Taiwan, home of local chip giant TSMC, overtook China to become Singapore's largest trading partner last year.\n\"If you strip out Covid-19 and the last few quarters where it was really turbocharged by AI, as a maturing and developed economy, typically if you look at the US, Europe or Japan, they are mostly growing by around 1% to 3%. That is usually accepted as what a mature or developed country can actually sustain,\" Ling adds.\nWhile economies with less exposure to AI could be more vulnerable to tighter global financial conditions, the MAS cautions that economies who are benefitting from AI will be exposed to the ups and downs of the AI cycle.\n\"Economies benefiting from AI-related investment and exports are better placed to absorb higher borrowing costs if strong earnings and investment continue,\" the MAS says. \"However, these economies are also more exposed to a pullback in AI, which could weaken growth and reduce their capacity to absorb shocks.\"","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":false,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"isVideo":false,"video":null,"symbols":[],"gpt_button":0,"need_auth":false,"need_login_tip":false,"code":"91000000","status":"200"},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"isLaohu8Offline":false,"tenantId":"TBGLOBAL","deviceId":"web-server-community-laohu8-v3","version":"4.50.1","shortVersion":"4.50.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2669984126","isCrawlerRequest":true}