13 October 2025
Following a sharp sell-off in global markets last Friday, Alvia Senior Investment Analyst Daniel Martin joined SBS News: On the Money to discuss investor sentiment, the forces driving volatility, and where disciplined investors can still find value.
Daniel described sentiment this year as “cautiously, over-optimistic” – a paradox that captures the current state of markets.
“We’ve seen volatility spikes on headlines that, in a more stable environment, the market would normally look through,” he said. “That suggests investors are nervous about stretched valuations. But at the same time, capital continues to flow into risk assets despite a negative equity risk premium, record current account deficits, and extreme index concentration around a handful of themes and companies.”
While global equities remain near record highs, Daniel noted that foreign ownership of US assets has reached unprecedented levels, introducing potential fragility if capital flows reverse.
“Foreign investors now hold over a third of US Treasury debt and a record share of US equities. That concentration, combined with an implied negative equity risk premium and a narrow set of themes driving the market, adds to the system’s sensitivity,” he said.
On the AI boom, Daniel cautioned that enthusiasm may be outpacing economic reality.
“We continue to see circular funding deals in a sector long considered capital-light. But when nearly $400 billion in CAPEX is being deployed on physical infrastructure, it’s difficult to call that capital-light,” he said.
Despite the structural risks, Daniel believes opportunities remain for investors who focus on fundamentals rather than momentum.
“We don’t try to call tops or bottoms; we invest through cycles, with a deep margin of safety and a clear understanding of where absolute returns will come from,” he said. “Right now, that means broadening both geographic and asset allocation exposure.”
Among areas of interest, Daniel pointed to:
“The investor flavour right now is to minimise volatility,” Daniel added. “But our focus is on avoiding permanent loss of capital, not short-term price moves. Over time, it’s discipline that compounds, not noise.”