Those with a bullish outlook for stocks in 2021 are set to get another uplift: more demand and less supply to the tune of $1.1 trillion.
That’s the conclusion of global market strategists at JPMorgan Chase & Co. as they expect a rise in equity demand of about $600 billion relative to this year. Meanwhile, supply will drop by $500 billion, returning to the very low levels of 2016 to 2018, the strategists led by Nikolaos Panigirtzoglou wrote in a note.
“This is similar to the equivalent equity demand/supply improvement in 2019 relative to 2018 which at the time had seen global equities rising by around 25%,” JPMorgan said.
The biggest slice of the higher demand is seen coming from retail investors as older cohorts “are abandoning their previous cautious stance,” based on the evidence in November, JPMorgan said. The analysts see retail inflows of about $40 billion a month for 2021, close to the historical average.
Sovereign wealth funds and central banks may be “modest” equity buyers and so-called risk parity funds, might want to increase their exposure after a decline in 2020. At the same time, supply will be cut by a normalization of leveraged buyouts and share buybacks and a slowing need for equity raising, JPMorgan said.
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