The market may be on the brink of a harmful debt bubble,which could result in widespread losses throughout the financial sector.Economist Dambisa Moyo has issued a warning about overvalued stocks,particularly driven by the enthusiasm surrounding artificial intelligence.

　　In an op-ed for Project Syndicate,Moyo—an economist,former Goldman Sachs executive,and principal of Versaca Investments—highlighted growing concerns about the stock market’s potential overvaluation.Wall Street’s excitement over artificial intelligence has propelled mega-cap tech stocks to significant gains,leading all three benchmark stock indexes to reach new highs.

　　”The signs of bubbles emerging in financial markets are clear to see,”Moyo wrote.”Such trends certainly justify worries about new stock-market bubbles.”

　　Moyo’s primary concern is the possibility of the US experiencing a problematic type of bubble fueled by highly leveraged and”unproductive”assets.Unlike productive assets,which are financed with cash or equity and whose losses are limited to direct investors,unproductive assets pose a greater risk to the broader economy.

　　Moyo pointed to the subprime mortgage crisis as a prime example of such a bubble.During that period,an excess housing supply combined with risky lending practices led to a one-third drop in home prices.

　　While most economists do not foresee a repeat of the 2008 crisis due to stricter lending standards in the banking sector,Moyo noted that many highly leveraged and unproductive companies are financed in the shadow banking sector,which lacks regulatory oversight on debt-taking.

　　There is already growing distress among some of the most indebted and unprofitable companies.According to S&P Global data,corporate bankruptcies are escalating at the fastest pace since the pandemic,with bankruptcy filings rising to 346 in June.

　　Moyo warned that losses from these troubled companies could spread to other areas of the market.”While a loss taken by someone who used accumulated savings will have only a limited effect on the wider economy,losses taken on’borrowed’money,especially with high leverage,could prove contagious.A system with low visibility regarding the sources and forms of capital underlying many investments is a risky one.Greater scrutiny of unproductive,leveraged assets is crucial to avoiding a financial crisis,”she said.

　　Other Wall Street experts have also expressed concerns about stocks and increasing corporate debt,particularly given the high valuations in the market.According to one valuation metric,stocks are currently more overvalued than ever,even surpassing levels seen in 1929.