U.S. Pension Funds May Pour $400 Billion Into Stocks, Lifting Virus-Hit Markets: JP Morgan
U.S. pension funds that delayed rebalancing their portfolios are likely to pump about $400 billion into stocks over the next two quarters, analysts at JP Morgan said, providing a potential boost to equity markets battered by the coronavirus pandemic.
Weeks of asset price volatility may have pushed some fund managers to postpone rebalancing portfolios where equity allocations have been knocked out of whack by a sharp decline in stocks, the bank said in a note to investors. The S&P 500 fell 20% since the start of the year, marking its worst quarter since 2008.
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“We still expect that US pension funds will eventually rebalance within 1-2 quarters,” wrote strategist Nikolaos Panigirtzoglou. The bank said its estimate of $400 billion in equity buying by the funds over the next two quarters could prove conservative. U.S. pension funds bought $200 billion in stocks by the first quarter of 2009, in the aftermath of the global financial crisis — equivalent to $600 billion today, the bank said.
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