A “liquidity-driven boom” is creating a dislocation between the real economy and the financial markets and a correction is likely “somewhere along the line,” according to Piyush Gupta, the chief executive of DBS Group Holdings of Singapore. Speaking at the Bloomberg Invest Global virtual conference on Tuesday, the head of Southeast Asia’s biggest banking group said the amount of stress on the real economy will be “huge” after months of lockdowns from New York to Singapore because of the coronavirus pandemic. The viral outbreak last quarter caused a slump in economies from the US to China and Europe “unlike anything the world has seen before,” according to the IMF, while stock-market losses have evoked some parallels to the Great Depression era. The threat of a second wave of infections in recent weeks are threatening an early rebound, putting policymakers on notice for more liquidity stimulus. “Everything suggests the recovery is going to be long and drawn out, including in China,” Gupta said. “I don’t think this V-shaped recovery is going to persist. China needs demand from the rest of the world as well.” The global economy is in for an extended period of slow growth, he said, making it hard to justify strong corporate earnings. Without that backing, it is equally hard to justify that markets will rise forever, he added. Gupta said there also is a lot of retail money in the markets right now – the “proverbial auntie” who’s buying – and intelligent investors may have missed out because they were looking at fundamentals. There is a likelihood of a correction to bring the markets in line with fundamentals, he added. That view is also vindicated by market analysts, who have in the past two weeks highlighted the risk of financial markets getting ahead of economic reality. “It is my belief the market has gotten ahead of where the economy will be in six months. So, we are ripe for some consolidation,” Andrew Slimmon, Head of Applied Equity Advisors Team at Morgan Stanley Investment Management, said in a report on June 22. The current disconnect, however, should become “less acute” as the economy reopens, he wrote. Duncan Lamont, Head of Research and Analytics at Schroder, said “false dawns” are an unfortunately common occurrence in financial-market history, according to a research report published this week. “We’ve seen some stock markets stage remarkable comebacks since the precipitous falls of March,” he said. “This doesn’t mean we’re out of the woods yet though.” IMF says coronavirus ‘Great Lockdown’ recession would be steepest in a century The International Monetary Fund (IMF) said in April that the global economy was projected to contract sharply this year, at a pace much worse than the global financial crisis in 2008. The outlook has not improved dramatically as countries and cities that have opened up are experiencing second and third waves of the coronavirus. Gita Gopinath, the IMF’s chief economist, said in a June 16 blog post earlier this month that the IMF’s upcoming World Economic Outlook Update is “likely to show negative growth rates even worse than previously estimated”. The update is set to be unveiled on Wednesday. Speaking on the same panel at Tuesday’s Bloomberg conference, Filippo Gori, the Asia-Pacific CEO of JPMorgan Chase, said a lot of emotions are “running wild” among investors right now, particularly as they react to geopolitical headlines and government stimulus efforts. The China Trade Deal is fully intact. Hopefully they will continue to live up to the terms of the Agreement! — Donald J. Trump (@realDonaldTrump) June 23, 2020 “My personal view is governments are trying to help the economies get back on their feet. They’ve done well in doing it exceptionally fast,” he said. “It is a long process. I don’t think we have yet seen the end of this crisis.” Markets in Hong Kong and other parts of Asia swung wildly on Tuesday morning as White House adviser Peter Navarro told Fox News that a Phase 1 trade deal between the US and China was “over.” He later said his remarks were taken “wildly out of context.” President Donald Trump later tweeted the deal was “fully intact” as markets in Asia reacted to confusion over Navarro’s comments. Separate, Gori said JPMorgan’s strategy in China had not changed in the face of rising US-China tensions, which is to be present for both the international and Chinese clients, especially when it comes to cross-border situations. “In the last few years, the flows both inbound and outbound that we have seen coming from China have been particularly remarkable,” he added. “Our strategy, for the time being, remains the same, which is to keep on investing in the country and helping our customers and clients in what are their business needs.” JPMorgan has had a presence in the country since 1921 and is stepping up its business in the mainland. It received approval last week to operate the first fully foreign-woned futures business in China, its asset-management arm agreed in April to buy out its joint venture partner in its mainland mutual fund business and received the go-ahead in December to start operating a majority-owned securities joint venture .