[ad_1]
In their analysis of Europe, which recently emerged as a 2021 stock market favorite, JP Morgan strategists address the question of whether record stock market valuations constitute a bubble or not.
According to JP Morgan, the sign of a bubble is the record high interest in so-called acquisition companies, or so-called SPAC companies (“Special Purpose Acquisition Company”) in English, which are listed in white in the content with the sole intention of providing a quick file for another company eager for quotes.
“Higher volatility”
Another sign is the growing interest in cryptocurrencies and disruptive vehicle companies, according to analysts at the bank.
The context has increased volatility and, in the event of future liquidations, JP Morgan primarily proposes a buy-in approach to financial and commodity companies. The bank has a negative attitude towards the communications, consumer goods and real estate sectors, while its attitude towards sectors such as technology, energy and industry is neutral.
Volvo lifts
In the industry in particular, which therefore remains neutral in its entirety, JP Morgan analysts, however, singled out Volvo as the front-runner in the face of an impending sectoral rotation whose catalyst was the state elections in Georgia, where two Democrats were elected. for Senate seats and put power in the hands of Democrats.
This industry rotation means that value stocks (mature companies with strong cash flows) should be rewarded. However, the rotation has yet to wait, something JP Morgan also admits.
“The rotation has yet to open as expected as markets are struggling with the third wave of the pandemic and macroeconomic data for January and February will likely remain weak. We predict risk assets will rise further during the first wave. mid-2021, but we view the weakening stock market opportunities as excellent opportunities to increase the value of shares, ”the bank writes according to CNBC.
“Volvo, BMW and Easyjet”
As for the possible inflationary bubble, no unequivocal answer is given about the bank’s opinion, but analysts refer to the current policy of the central bank as a significant factor that reduces the risk of an immediate explosion of a possible one.
“The total liquidity surplus that was created at the beginning of last year will keep us at record levels,” the bank writes.
Some other companies that are among the industrial companies that advocate for dip buying at JP Morgan are BMW and Easyjet. Regarding the favorite financial sectors, some of the main targets are Société Générale, Barclays, ING, BNP Paribas and UBS, while Anglo American, BHP and Arcelor Mittal are mentioned for the commodities sector.
