The ECB said in a Monday blog that frothy US tech valuations may be vulnerable
to a market correction and that limited fiscal and monetary policy space would
constrain the ability to cushion any economic shock. Prices could fall even if
technologies succeed and corporate profits rise because profit expectations may
be overly optimistic; when investor sentiment reverses, losses can outpace what
would occur under rational pricing. A US tech downturn would pose a
financial‑stability risk for Europe: European household exposure to the seven
The largest US tech firms is roughly €440bn, with pension funds and insurers holding
similar-sized exposures. Given high correlation between European and US markets,
European equities would likely be affected.
