2022 Investment Outlook | JP Morgan：Investors are too pessimistic

2022 is coming, one of Wall Street's top investment banks — JP Morgan offers its views on stock market trends, industry sectors, black Swan events and others. I have briefly sorted out some of the best ideas to share with you, hope it will be helpful.

Given already low investor positioning, record share buybacks, limited systemic risk and positive January seasonality, conditions are not ripe for a massive sell-off,'strategists at JP Morgan wrote in a note to clients. 'Investors are too bearish and the market's pessimism about a hawkish Fed and Omicron development is overdone.'

While the S&P 500 hit another all-time high last weeks, the rally was increasingly driven by a handful of large companies, with 'extreme dispersion and record concentration' suggesting a high degree of caution rather than a rush to sell. Investors have long viewed stocks of large companies as safe-haven assets or quasi-bonds.

Earlier, JP Morgan said that 2022 is still a 'spring' for U.S. stocks. It lists three main reasons:

'Better than expected earnings growth, improvement in China/emerging markets and normalization of consumer spending habits.' In November, JP Morgan predicted the S&P 500 would hit 5,000 in the first half of 2022.

On average, regulatory waves typically last 1-2 years, during which capital markets tend to underperform in an atmosphere of rising risk premiums, but eventually the real economy and capital markets adapt to this new policy framework.

JP Morgan sees this as not a battle between the state and the private, nor is it about changing the whole business model, but a balance between the interests of the company and those of the family.

In the new energy vehicles, renewable energy, advanced manufacturing, technology and digitalization fields, there will be 'tomorrow's stars' to achieve new growth engines for the economy.

Recommend 'overweight' in industry, information technology, renewable energy and consumer discretionary; 'Neutral' on energy and raw materials, and 'underweight' on daily consumption, communications services and health care.

As for the most popular metaverse concept,JP Morgan said it could be the next generation of social media and gaming platforms, although it may take years to create and evolve. Like these platforms, it is highly likely that metasuuniverse will initially serve as an advertising and e-commerce platform for offline products. This means that the addressable consumer spending market space (TAM) in the US is $8.3 trillion, covering real estate, core retail, automotive, gaming and more.

However, the unprecedented strength of digital media and e-commerce products, coupled with a variety of uncertainties, the market will not easily adopt the metaverse in the short term.

JP Morgan strategists believe the market turmoil caused by a new mutant strain of Omicron could provide an opportunity for investors to position themselves for the reopening and reversal of commodity trading trends.