Morgan Stanley strategists said an expected “V-shaped†economic recovery, greater clarity on Covid-19 vaccines and continued policy support offer a favorable environment for stocks and credit next year.
In an outlook for 2021, a team including Andrew Sheets recommended investors overweight equities and corporate bonds agÂainst cash and government debt, and sell the US dollar. Volatility is set to decline, and investors should be “patient†in commodity markets, the strategists said.
“This global recovery is sustainable, synchronous and supported by policy, following much of the ‘normal’ post-recession playbook,†they wrote. “Keep the faith, trust the recovery.â€
A gauge of global stocks headed toward a record Monday amid optimism that the expected roll-out of vaccines and additional US fiscal stimulus will bolster the world economy. Still, skeptics argue the short-term outlook is challenging as nations resort to lockdowns to fight a resurgence in virus cases and lawmakers bicker over the size of US relief spending.
Morgan Stanley joins JPMorgan Chase & Co and Goldman Sachs Group in painting a positive outlook for equities. JPMorgan strategist Marko Kolanovic said US election results create a bull case for markets, while David Kostin at Goldman Sachs expects society to normalise gradually next year.
The Morgan Stanley team doesn’t expect a smooth path upwards and noted that significant challenges remain. Risks include a worse-than-expected Covid-19 winter wave, and a return to austerity in the longer term, according to the note.
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
