Goldman & Morgan Stanley Warn of 10–20% Market Correction — Asia Poised as Growth Haven

The recent remarks from Goldman Sachs CEO David Solomon and Morgan Stanley CEO Ted Pick, made at the Global Financial Leaders’ Investment Summit in Hong Kong on November 4, 2025, suggest that equity markets are overextended. Solomon anticipates a 10–20% decline in equities within 12–24 months, while Pick identifies 10–15% pullbacks as healthy, assuming no macroeconomic “cliff.” [1][2][7] These assessments are consistent with standard bull‐market behavior—steep gains followed by partial retracements—that do not necessarily presage structural downturns.

The International Monetary Fund’s latest report reinforces these warnings. In its October 2025 Global Financial Stability Report, the IMF highlights inflated valuations in equities and corporate credit, growing government deficits, and stressed interbank and non‐bank financial institution linkages as rising sources of systemic risk. [4][5] Its language stresses the possibility of a “disorderly correction” should adverse shocks—like trade wars, fiscal imbalances or policy errors—materialize. However, the IMF does not project imminent recession; rather, it underscores elevated risk and elevated uncertainty. [5]

Strategically, investors and policymakers are at an inflection point. CEOs’ guidance suggests that now is a time to ensure portfolios are robust—capital weighted to quality, core equities, and resilient sectors—and to consider scaling exposure to speculative, high‐beta, or unprofitable equities. [2] Moreover, institutional investors may favor geographic diversification, particularly toward Asia, where reforms in China, corporate governance improvements in Japan, and infrastructure investment in India provide attractive medium‐term opportunities. [1]

Open questions remain: what specific triggers might cause the anticipated drawdown? How aggressively will central banks respond if inflation resurges or if bond yields spike? Will geopolitical tensions or trade disruptions act as shock multipliers? And, crucially, how will liquidity, regulation of non‐bank finance, and credit markets behave under stress? The answers will shape whether any correction is orderly or disorderly.