Joanna Ossinger and Farah Elbahrawy, Bloomberg News
After a selloff that put global stocks on course for their worst month since the start of the pandemic, strategists from Goldman Sachs Group Inc. to Citigroup Inc. say it’s now time to buy.
“Any further significant weakness at the index level should be seen as a buying opportunity, in our view,” Goldman strategists including Peter Oppenheimer wrote in a note on Wednesday. Citi strategists including Robert Buckland, meanwhile, said that the “rapid de-rating of growth stocks may slow as real yields stabilize.”
Equities have had a rough start to 2022, amid a rise in bond yields, expectations for U.S. Federal Reserve tightening and the threat of a war in Ukraine. The global MSCI ACWI Index is down about seven per cent in January, and is set for its worst month since March 2020. The S&P 500 Index, meanwhile, narrowly avoided a correction on Tuesday, closing more than nine per cent off its record high on Jan. 3.
“The key thing for equities from here is how much any of this shift upward in interest rate expectations and indeed in financial conditions will hit growth,” Goldman’s Oppenheimer said in an interview with Bloomberg Television. “That’s going to be key to determine where equity markets stabilize.”
Citi’s strategists echoed the sentiment in a note today, saying that their bear market checklist — which screens for various fundamental and market factors — is suggesting to buy the dip. They are particularly bullish on markets outside of the U.S. and prefer defensive sectors such as consumer stables and health care in the U.K. and Japan.
To be sure, not all are turning positive. Barclays Plc strategists led by Emmanuel Cau wrote in a note today that mutual funds and retail investors remain “very overweight” equities, so more de-risking is possible if fundamentals worsen.
Still, the positive calls are growing. Strategists at Bank of America Corp. wrote on Tuesday that investors should “buy some dips” in the U.S., recommending stocks with strong fundamentals and less vulnerability to macroeconomic factors including chip companies Applied Materials Inc. and Broadcom Inc.
Meanwhile, those at Wells Fargo & Co. were among the first to recommend buying, writing in a note on Tuesday that it’s “time to put new money to work.”