JPMorgan Estimates Up To $316 Billion In Forced Month-End Selling

4. The Japanese government pension plan, or GPIF, a $1.7 trillion AUM entityis also set to sell: JPM estimates that the pending equity rebalancing flow by the GPIF into the current quarter-end based on current equity and bond returns is also likely negative at around $34 billion.

Putting these together, we get:

  • Mutual -$107BN
  • Defined Pension -$110BN
  • Norges Bank -$65BN (could be -$22BN)
  • GPIF -$34BN

... a grand total of $316BN.

To be sure, this number will likely be lower following last week's selloff which followed the original JPM analysis, and may be some $40BN less based on assumptions about forced Norwegian selling, we are still talking about selling in the $100BN+ range in the days before quarter end, which is why JPM concludes that "In all, we see some vulnerability in equity markets into quarter-end from pension funds entities as well balanced mutual funds selling equities and buying bonds to rebalance towards their target equity/bond allocations."

And while JPM's last forced selling forecast was a dud, with the bank's Nov 2020 prediction of a similar number ($310BN) in year-end selling never materializing (as JPM now acknowledges) and stocks shooting higher by the end of last year, the reality this time is that with markets suddenly far more jittery many whale investors will not risk testing if JPM is wrong twice in a row and may simply frontrun the potential selling, creating a self-fulfilling prophecy as fears of possible selling spark waves of actual selling. The only question we have is when does the frontrunning officially begin?

1 2 3
View single page >> |

Disclaimer: Copyright ©2009-2021 Media, LTD; All Rights Reserved. Zero Hedge is intended for Mature Audiences. Familiarize yourself with our legal and use policies every time ...

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.