As investors enter the final month of a roller-coaster year for markets, the view ahead appears rosy whether you ask economists, portfolio managers or strategists. With few alternatives to equities on the horizon for 2021, the debate is more centered around which regions, sectors or styles will lead to maximum returns.
Starting with some bottom-up analysis, the 12-month price target for the Stoxx Europe 600 Index derived from all the single stock targets offers an upside of about 7% from Monday’s close. That’s even after a record monthly gain of 14% in November.
The next few months will be key, and in the spring, “we will see a significant upturn in growth,” says Jens Wilhelm, a member of Union Investment’s board of managing directors responsible for portfolio management. He sees 2021 as a “year of opportunities.”
Strategists at Helaba point out that while stocks are stuck between high valuations, a lack of alternatives and still some need of fiscal and monetary support, the prospects of further steps toward a vaccine — and with that, a dynamic economic recovery — hold the promise of making them “the best traditional asset class in 2021.”