U.S. pension funds that delayed rebalancing their portfolios are likely to pump about US$400 billion into stocks over the next two quarters, analysts at JP Morgan said, providing a potential boost to equity markets battered by the coronavirus pandemic.
The bank said its estimate of US$400 billion in equity buying by the funds over the next two quarters could prove conservative. U.S. pension funds bought US$200 billion in stocks by the first quarter of 2009, in the aftermath of the global financial crisis - equivalent to US$600 billion today, the bank said.
Some index providers, such as S&P Dow Jones Indices, have delayed their quarterly rebalancing due to the market volatility, potentially complicating the picture for funds that look to track index performance. At the same time, mutual funds, pensions and other asset managers rebalancing their portfolio may have stoked some of last week's gains.
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