(Bloomberg) – Now is finally the time to buy risk distributors, with global equities moving toward year-end, said strategists at JPMorgan Chase & Co.
Positive technical indicators and monetary easing are likely to offset the uncertainty surrounding the US-China trade war and the wild card on developments in the customs negotiations, according to JPMorgan.
After August was sold, the strategists last week signaled that the time to buy shares was approaching, and today was finally acting on its impulse. JPMorgan joins others on the sales side such as Bank of America Merrill Lynch, who on Friday said it is bullish on risk weight, including equities, for 2019.
"We now recommend putting back risk, tactical indicators have become better, "JPMorgan strategists led by Mislav Matejka said in a note to clients. "Admittedly, the next move is a wild card for all this, but we think the hedge rate for a positive trend is quite low now."
The MSCI World Index fell by 2.2% last month, posting a second month decline in years, when an escalation in the US-China woodpecker sent traders into a profit mode. The Trump administration released tariffs on about $ 110 billion in Chinese imports on Sunday, signaling that the conflict is far from over.
JPMorgan's bullish appearance contrasts with many large investors on the buying side. Last week, UBS Global Wealth Management was underweight on equities for the first time since the eurozone crisis, while Legal & General and Manulife Investment Management have made a profit on their risk overheads and gone into a wait-and-see mode.
Here are some of the potential global equity drivers quoted by JPMorgan analysts:
The US Federal Reserve relieves, but high return tensions or unemployment claims do not provide excitementGlobal activity momentum is likely to improve towards the end of 2019. Earnings margins may rise in the second half of the year. Surprisingly positive Quality-on-the-earnings quality ratings are "demanding" Investor positioning remains defensive without intention, which is a contrarian bullish signal
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