JPMorgan’s Kolanovic Boosts Stocks Call on Vaccine Game-Changer

(Bloomberg) -- JPMorgan Chase & Co. strategists have increased their exposure to global stocks and backed away further from sovereign bonds, calling this week’s positive vaccine news a “game changer” for markets.

The vaccine breakthrough will allow investors to look past the resurgence in coronavirus cases toward the end of pandemic and the broader reopening of the global economy, according to a team including Marko Kolanovic. Bolstering JPMorgan’s bullish view was a positive third quarter earnings season and benign U.S. election outcome, it added.

“We expect equities to continue to rally, and bonds to sell off,” the strategists wrote Thursday. “We retain a pro-risk allocation in our model portfolio given the easing of major market risks, still moderate investor positioning, strong growth rebound, and robust policy support.”

The JPMorgan team boosted its equity overweight to 10% from 8% and raised the government bond underweight to minus 12% from minus 11%, according to the note. It also reduced an overweight position in corporate bonds.

Euphoria over positive vaccine efficacy data from Pfizer Inc. and BioNTech SE sent global stocks surging against their bond counterparts. The MSCI AC World Index is now up about 9% this month, while the Bloomberg Barclays Global Aggegrate Treasuries Total Return Index is little changed.

Global value stocks should enjoy a period of long-term outperformance on the arrival of a vaccine, according to the strategists. That led them to prefer non-U.S. shares over their American counterparts, they said.

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