Jakarta, CNBC Indonesia – The global stock rally appears to be nearing its end, as investment managers (fund manager) predicts that the stock market will likely experience a moderate correction by the end of the year. In this regard, investment managers also began to reduce the share of shares in their portfolios last month.
This is the conclusion of the results of a Reuters poll conducted during August 12-30, 2021 on a number of investment managers and investment heads in Europe, Japan and the United States (US).
On Wednesday (1/9/2021) the MSCI ACWI global stock index – which measures the performance of stocks in 50 countries – reached an all-time high of 743.67, while the European stock index STOXX, managed to gain more than 2% in last month. The increase in these two indices was supported by monetary and fiscal stimulus during the Covid-19 pandemic.
However, in the midst of the increase in the global stock index, a number of fund managers began to reduce the portion of their investment in equities or stocks.
According to a Reuters survey, fund managers decided to slightly cut their allocation of equity recommendations to an average of 49.9% of their global portfolio model. Previously, in July, Reuters reported, investment managers gave a 50.1% share for equities, which was the highest in the last 3.5 years.
The findings of this survey seem to precede the ‘wind of change’ in the monetary policy of the US Federal Reserve, aka The Fed. As is well known, currently there is disagreement among Fed officials about when the time is right tapering or a $120 billion reduction in the Fed’s monthly bond purchases will begin.
Then, when asked about the possibility of a correction in global stock markets by the end of this year, a small percentage of respondents – 9 out of 17 people – affirmed the possibility, while the rest denied that the global stock market would be sluggish.
In a previous Reuters survey of 250 stock market strategists on August 11-24, market analysts predicted that the ‘honeymoon’ of the global rising stock rally will end and there may be a correction by the end of this year.
“There is growth scare as coronavirus infections increase and slowdown in reopening activities [sektor ekonomi] can scare the domestic market [AS] so it’s a moderate correction,” Rob Haworth, director of senior investment strategy at US Bank Wealth Management in Seattle, Washington, told Reuters.