Eurozone Exposure to US Tech Firms Reaches €440 Billion

The European Central Bank (ECB) has warned that eurozone households have around €440 billion in exposure to US technology firms, mainly through holdings in mutual funds and ETFs.

According to five ECB economists, a correction in the AI sector could have serious consequences for the Eurozone as it would force funds to sell assets to meet redemptions, exacerbating the downturn.

The economists note that compared with the dot-com crisis, the authorities now have less scope to mitigate the consequences through interest rate cuts or fiscal measures.

Share valuations in the US are close to all-time highs, increasing the risk of a correction. The strong historical correlation between US and European stock markets means the Eurozone cannot be considered immune.