The record rally by global exchanges this year has not lowered investors' bull market expectations for 2021.
Meghan Shue, Head of Investment Strategy at investment consultancy Wilmington Trust, says she has very high expectations for the next 9 to 12 months.
Shue, who has undertaken the management of 124 billion dollars of assets, stated that "We are in the period where we expect the most bull market from the stock markets for almost a year."
Stating that Wilmington Trust has switched to stock position, Shue stated that there are three factors that will affect stock markets up in the medium term.
The first of these three factors is the Kovid-19 vaccine, which Shue defined as "It will completely change the game for a faster return to normal in 2021".
Shue explained the picture of the financial stimulus package and a potentially divided government in the US as another factor that will affect the stock market.
The third factor that the chief strategist believes will affect stock markets in the medium term is monetary policy. Shue said of the US Federal Reserve's (FED) monetary policy, “It will not create an additional support in the short term. However, we, as long-term investors, see a strong bull market for stocks in the long run, after the FED allowed inflation to rise above target levels for a while ”.
Shue stated that investments in emerging markets and low-capital company shares in the USA will bring profit, and they are investing in these two areas.
The chief strategist said, “US big capital stocks, technology stocks are priced at this point with really quite a lot of growth targets in valuations. "We anticipate an additional rise in emerging markets' stocks and US low-capital stocks, as the effects of the early economic cycle have not yet been fully priced."
The chief strategist noted that especially emerging markets would benefit from the weak US dollar. Shue expects these countries to thus implement more coherent trade policies and to adopt a greater degree of digital transformation around the world.
Shue is low capital companies in the US; It predicts that the economy will benefit from the economic dynamics that will increase in the early period, acquisitions and mergers that will increase with cash-holding companies, and the rotation that will take place from high-capital shares towards these shares.
Still, the chief strategist does not ignore the risks. "This virus-related process is a very difficult one," Shue said. "The real risk is that the epidemic stays longer than many people expect, and businesses are closed for a very long time in the first quarter."
Shue warned that if concerns about the epidemic materialize, or the second round of Senate elections in the US state of Georgia in January lead to a divided government as expected, this could threaten the prospects of an additional stimulus package.
The chief strategist said that an unexpected result in the second round of elections could also pose a risk to stocks. Shue stated that if the Democrats gain the majority in the US Congress as a result of these elections, high taxes and regulations in the field of energy and health will negatively affect the stock markets.