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Fund managers are underweighting US equities so much that their future divestment is no longer a potential, says the UBS group bank.
Since the peak of two months ago, the main index of the New York Stock Exchange S & P500 fell 6.9%, but at the lowest point of the sale, its loss reached 11.5%. According to the latest rating from the UBS Group's clients, this hole will probably not be filled anymore. This is suggested by the investor positioning index calculated by them, which tracks the involvement of fund managers active in the US stock market and returns them to historical averages.
Active fund managers significantly reduced exposure to US equities beginning in early October, bringing the positioning rate to a standard deviation of 0.9 below the long-term average [odchylenie standardowe to używana w statystyce, odniesiona do zmienności miara odchylenia – red.]. When the index was as low in history, the S & P500 index rose on average by 3 to 4% over the next 30 days, according to specialists calculations. Although risk factors are more pronounced as we approach next year, the medium-term outlook remains favorable.
Due to the valuation adjustment, they have fallen, discounting a number of market risks, and the positive factors appearing at the horizon are not yet included in the prices. Events to which investors give too negative expectations include the G20 summit that will end this weekend, during which US President Donald Trump and his Chinese counterpart Xi Jinping will meet. In a recent Wall Street Journal interview, Donald Trump reiterated the threat of paying the rest of China's imports with tariffs.
"The S & P500 index takes into account the increased tightening of trade tensions. The absence of bad news from the G20 summit could therefore raise the index to 2800 points," say specialists group UBS.
Marek Wierciszewski
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