JPMorgan Sees $410 Billion Bump to Stocks’ Demand-Supply Balance

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(Bloomberg) — Equity demand is likely to rise next year while supply contracts, according to JPMorgan Chase (NYSE:) & Co.

Retail investors and equity long/short hedge funds are expected to drive demand for equities in 2020, JPMorgan strategists led by Nikolaos Panigirtzoglou said. They foresee improvement in equity demand versus supply of about $410 billion, when calculated by adding up the projected demand-flow changes and subtracting the supply change compared with 2019.

That’s around half the improvement this year relative to 2018, which is estimated at $850 billion — the best since 2010 — according to JPMorgan’s estimates.

Institutional investors, such as balanced mutual funds and commodity trading advisors, will limit the 2020 improvement, after they already boosted equities exposure in wake of the late 2018 stock slide, the strategists wrote. The overall improvement in equity demand in 2020 will be $215 billion compared with 2019.

But supply is unlikely to keep pace, shrinking $195 billion globally compared with an expansion of $687 billion in 2019, the bank estimates. That’s because share offerings will slow and buybacks by companies will pick up, Panigirtzoglou and his colleagues wrote.

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