DeVere Group: Bank of England missing the bigger picture on stock markets
The Bank of England is missing the bigger picture when it says global stock markets are set to fall, believes the CEO of one of the world’s largest independent financial advisory and asset management organisations.
Nigel Green of deVere Group is speaking out after Bank of England Deputy Governor Sarah Breeden warned in a BBC interview that global equities look too high and are likely to fall because prices do not fully reflect the risks facing the global economy.
He says: “Sarah Breeden is right to say valuations are high. She is right to say investors must not be complacent. But the conclusion that markets are, therefore, set for a broad fall misses the central point, which is that AI and tech are changing the valuation framework in real time.
“We have never had AI before at this scale. There’s no clean historical benchmark for what markets should pay for companies leading a once-in-a-generation productivity, infrastructure and earnings cycle.”
The warning comes as global equity markets continue to show resilience.
In the UK, the FTSE 100 remains close to record highs, trading around the 8,000 level in recent sessions, supported by strong performances in energy, financials and multinational earnings exposure.
Despite global uncertainty, the index has held firm, reflecting the strength of corporate balance sheets and overseas revenue streams.
In the US, markets have experienced some near-term volatility following a strong run, with the S&P 500 and Nasdaq easing modestly in recent sessions.
Yet the broader picture remains robust. More than 80% of companies reporting in the current earnings season have beaten expectations, underlining continued corporate resilience even in a higher-rate environment.
Nigel Green says: “Markets never move in a straight line. Valuations will always come down in some areas, others rise simultaneously.
“There’ll be bouts of volatility, and some of them will feel uncomfortable. But investors should be extremely careful about interpreting a senior central bank warning as a signal to retreat from markets.
“In our view, the greater danger for long-term investors is being scared out of positions while structural growth remains intact.”
AI and tech remain the dominant forces behind current market dynamics. Companies across semiconductors, cloud computing, data centres, automation and enterprise software are seeing sustained demand driven by artificial intelligence adoption.
Capital expenditure across the sector is accelerating, with major global firms committing significant resources to expand capacity and capability.
Corporate earnings continue to reinforce this trend. Companies with credible AI exposure, strong margins and clear growth trajectories are outperforming, attracting capital and driving index-level gains.
This concentration has contributed to elevated valuations, but it also reflects where earnings growth is being generated.
“High valuations demand discipline, but high valuations do not automatically mean irrational valuations. If earnings growth, pricing power and capital investment are accelerating, a premium can be justified,” opines the deVere CEO.
“The question investors should ask is not simply whether markets look expensive compared with the past.
“The question is whether the past offers the right benchmark for AI and tech-driven earnings growth.”
He also agrees with the Bank of England that risks are real.
“Private credit markets are expanding, government debt remains elevated, and geopolitical tensions, including trade pressures under US President Trump, have the potential to create volatility and disrupt expectations.
However, Nigel Green says these risks reinforce the importance of disciplined investment rather than broad market caution.
“Investors must, of course, be judicious. They need diversification, careful asset allocation, and exposure to the sectors and companies most likely to benefit from structural growth trends. They also need to avoid complacency.
“Good advice is essential in this environment because the gap between winners and losers is widening.”
He concludes: “An unusual warning from a senior Bank of England official carries weight, but it could itself become a risk if it encourages investors to step away from markets.
“We believe investors should remain invested, remain selective, and remain focused on the forces reshaping the global economy.
“Volatility will come, valuations will adjust, but we expect that AI and tech are likely to continue to provide a powerful foundation for markets this year.”