FILE PHOTO: FILE PHOTO: European Union flags flutter outside the European Central Bank headquarters in Frankfurt, Germany, April 26, 2018. REUTERS/Kai Pfaffenbach/File PhotoFRANKFURT : The European Central Bank warned on Wednesday about a"bubble" in stocks related to artificial intelligence , which could burst abruptly if investors' rosy expectations are not met.
The central bank for the 20 countries that share the euro noted the stock market, particularly in the United States, had become increasingly dependent on a handful of companies perceived as the beneficiaries of the AI boom. The ECB noted investors were demanding a low premium to own shares and bonds while funds had cut their cash buffers.
Among other risks, the ECB flagged the euro area was vulnerable to more trade fragmentation - a key source of concerns for policymakers and investors since Donald Trump won the U.S. Presidential election earlier this month.