UK - Pension funds could see their UK equity portfolios rise by up to 15% by the end of the year, leading analysts predict.
JPMorgan Securities says overly gloomy prospects of earnings growth have led to cheap valuations in the UK, Europe and Japan, and overall global equities will rise 10-15% by the end of December.
Its report, The Big Picture, identifies healthcare, utilities and energy as sectors that became undervalued as markets nose-dived over the last three months. It blames these undervaluations on investors selling equities as an asset class rather than discriminating between sectors.
While JPMorgan’s outlook would take the FTSE100 above 5000, Merrill Lynch is predicting a more modest position of 4500 by the end of December.
European equity strategist Khuram Chaudhry said while the bear market may not have fully ended, there were several indicators of a market rally before the year end.
Cash levels at institutional investors have increased from 4.2% in July to 5.8% in August, a reliable sign, he said, that there is scope for investors to reinvest in the market.
He added that in recent weeks the number of buyers in the market has outnumbered sellers.
Many of the buyers are UK company directors, Chaudhry said, generally have a good track record of buying low and selling high.
Most respondents in this week's Pensions Buzz do not think businesses should be able suspend AE contributions if in financial distress.
Former BHS owner Dominic Chappell has lost the appeal against his section 72 conviction and sentence for failing to hand over information to The Pensions Regulator (TPR).
This week's top stories include Marsh and McLennan Companies agreeing to buy JLT, and the home secretary calling for AE to be scrapped in a no-deal Brexit scenario.
Lesley Titcomb says the watchdog wants closer interactions with pension funds to spot problems sooner and act before having to use its more stringent powers