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Five reasons why markets will continue to rise
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Loading...Financial markets are rising again, the last reason for this is the surge in global production.
Here are the five reasons why the market may continue to rise:
1. Fund managers will want to catch up
This is the season in which managers will increase risk appetite as they will most likely try to catch up because of their lag in the first three quarters. According to JP Morgan, large mutual funds have fallen significantly behind their average returns, and any outflows of losing shares are likely to make the market move.
2. Distribution of Assets in Emerging Markets
Investments in highly risky markets may not be as big as you think. This is because investors in bonds in this market have almost zero yield and are about to sell out their bonds, which will lead to the emergence of free cash that will be invested in shares in order to increase the annual yield.
On the other hand, investors increased the hedging item in their portfolios in the summer, fearing that Sell Off would come off because of Hawkish's moods in most central banks. If this hedge is withdrawn, free cash can be fed into the equity market.
3. The low level of bond purchases
Banks are struggling to issue new bonds, but at the end of last year the value of high-quality bonds reached only $ 3.5 billion after a $ 8.6 billion decline. This lack of bond market is a result of the macro conditions that offer strong demand on the stock market. If this trend remains, investors will opt for shares in front of the bonds.
4. Increasing the efficiency of global production
For the first time in nearly two decades, growth forecasts in developed economies were revised through inflation forecasts revised downwards. This implies increasing the efficiency of global production - something that is not seen in official data, and this should stimulate growth in the medium term. If supply confidence gains greater traction, bulls could more easily build a solid foundation for growth.
5. Trump Trade
After everything listed, Trump trade will come into play as well, because the likelihood that it will push its tax reform will increase. With a tax reform adopted, many US firms will be able to repatriate all their profits across borders, and this will result in the accumulation of many free funds that will be used to buy back shares.
Source: Bloomberg Pro Terminal
Jr Trader Petar Milanov
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