SEAN DARBY: Don't Expect Institutional Investors To Pour Money Into Stocks

jefferies sean darbySean Darby

Photo: Bloomberg

Jefferies’ top equity strategist Sean Darby does not expect last quarter’s “sharp bounce” in the global stock markets to continue in the second quarter of this year.A big reason for Jefferies’ stance is that equity turnover over the past two quarters has been low, which they believe “reflects a lack of conviction from asset allocators rather than portfolio managers.”

Some strategists have argued that this should be promising for stocks as portfolio managers feel compelled to move into stocks.

However, Darby argues that just the opposite is true.

“The good news is that the vast majority of global money has not participated; the bad news is that money invested by institutions into fixed income tends to be ‘stick’ and not easily switched around.”

This is not to say Darby doesn’t continue to prefer U.S. stocks.

Below is their take on the global equity market in quarter two.

chart

Photo: Jeffries

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