Upside potential for US stocks
Grobank rt to companies with structural growth
US election should hardly influence courses
New highs in 2021
Investors should add cyclical exposures to their investment portfolios over the next twelve months in order to benefit from the economic recovery after the corona crisis, said JPMorgan’s head of European markets, Grace Peters, in an interview with host Geoff Cutmore on CNBC Broadcast “Squawk Box Europe”. There will be more volatile market phases, but prices should climb significantly in the long term. Peters predicts that the US S&P 500 index, which tracks the 500 largest listed companies in the USA, will increase to 3,500 to 3,600 points by the end of 2020. By September 2021, she expects a level of around 3,750 points. Compared to September 2020, this would correspond to an increase of around ten percent. “We expect US markets to hit new highs in the next twelve months. We also still believe that the earnings picture for US companies is very strong.” In comparison to other asset classes in particular, stocks could clearly score here. “For US equities, we see upside potential of around ten percent over the next twelve months,” she added.
Certain sectors particularly hard hit by price increases
The Grobank advises investors to act more cyclically in business areas with structural growth, as these are particularly affected by the recovery phase. Examples of this, according to Peters, are companies that focus on digitalization, medical innovations or environmental protection. But companies from the industrial and building materials sectors could also be among the big winners. Peters explained that the bank also observes companies that benefit from higher government spending and have committed to environmental, social and corporate governance factors. Particularly on the European stock markets, people focus on such companies. Nevertheless, the JPMorgan strategist warns against only paying attention to market participants who are leaders in these areas and who are already fully implementing the relevant requirements. Furthermore, there are many companies that are currently in a transition phase towards these values. As an example, she named electricity suppliers in the interview who are switching to environmentally friendly energy sources such as wind and solar power and who will have expanded their position in this area in the coming years. The same applies to automobile manufacturers who are gradually converting their product portfolios to electric vehicles.
Impact of the US election in November
However, Peters does not consider the outcome of the US presidential election in November to be a major risk factor in terms of her forecast for the next twelve months. She does not believe that the development of the stock market will change if the Democratic candidate Joe Biden against the current US president Donald Trump wins – or loses. Peters justified this with historical data: Grobank has been carrying out market analyzes since the 1930s and also took into account the results of previous elections. Instead, the course of the share price is much more dependent on the profits of the respective companies, so Peters.
In a poll conducted by the US broadcaster CNBC in August, several analysts said that the outcome of the election could have a major impact on the markets. More than half of the respondents said that the S&P 500 could recover by up to five percent if Trump were to keep his position.
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