You are here: Home » International » News » Companies
Business Standard

JP Morgan sees possible $300 billion rebalancing flow from stocks

If the stock market rallies into December, there could be an additional $150 billion of equity selling into the end of the month pension funds that tend to rebalance on a quarterly basis

Topics
JP Morgan | stocks

Bloomberg 

jp morgan, J P
An MSCI gauge of global stocks reached a record on November 16. I

Rebalancing flows may lead to an exodus of around $300 billion from global by the end of the year, according to JPMorgan Chase & Co.

Large multi-asset investors may need to rotate money into bonds from after strong equity performance so far this month, strategists led by Nikolaos Panigirtzoglou wrote in a note Friday. They include balanced mutual funds, like 60/40 portfolios, U.S. defined-benefit pension plans and some big investors like Norges Bank, which manages Norway’s sovereign wealth fund, and the Japanese government pension plan GPIF, the strategists said.

“We see some vulnerability in equity markets in the near term from balanced mutual funds, a $7 trillion universe, having to sell around $160 billion of equities globally to revert to their target 60:40 allocation either by the end of November or by the end of December at the latest,” the strategists wrote.

If the stock market rallies into December, there could be an additional $150 billion of equity selling into the end of the month pension funds that tend to rebalance on a quarterly basis, they added.

An MSCI gauge of global reached a record on Nov. 16. It’s up more than 10% this month amid positive signs about Covid-19 vaccine developments, and as concerns about the U.S. election began to fade. The Bloomberg Barclays Global-Aggregate Total Return Index has risen around 1.5%.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, November 24 2020. 01:59 IST
RECOMMENDED FOR YOU
.