Marko Kolanovic, chief global market strategist at JPMorgan, an investment bank, said global markets may have reached a turning point and value stocks will outperform growth stocks for a considerable period of time, the foreign news agency reported.
The rally in value stocks is expected to continue for some time as the economy gradually recovers from the epidemic, volatility declines, and fiscal and monetary policy support drives the rally, Kolanovic said in an interview with a foreign newspaper, which could also trigger a shift in long-term investment to more cyclical and inflationary trends. He also believes that the fundamentals of U.S. stocks are improving, under the stimulus bill and supportive monetary policy, and now the panic index VIX is gradually declining, all help the flow of funds.
In addition to bullish on value stocks, JP Morgan is also one of the most optimistic investment banks on Wall Street to see the rise. The company set the year-end target for the S&P 500 at 4,400 points, higher than the median market expectation of 4,100 points, the S&P 500 index closed yesterday at 4,127 points.
However, Wall Street also has another school of thought. Bank of America and Citigroup both predict that the S&P 500 will fall back to 3,800 points at the end of December. Bank of America strategists led by Savita Subramanian warned in a report that weak returns are ahead, while the Citigroup team led by Tobias Levkovich cited negative factors such as high valuations and the possibility of the Federal Reserve tapering stimulus measures at the end of this year.
The analysis pointed out that although the rise in U.S. Treasury yields has helped the market favor value assets, it is unlikely to become a negative factor for stocks until the 10-year Treasury yield reaches 2.5%. The U.S. 10-year Treasury yield climbed to 1.77% at the end of March, a record high since January last year, and is now at the 1.6% level.
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