U.S. investment bank Goldman Sachs released a report about the stocks and which factors will affect the market in 2020. It is important to mention that it is interesting to have a look at how the market is going to develop in the future. In this sense, such reports, provide useful information about the stocks.
On Monday, one of the major U.S. stock indexes, which is the S&P 500, reached the highest point. According to Goldman Sachs, this tendency will continue, as the bull market will continue rolling in 2020.
The report identified three major buyers which will contribute, and these buyers are corporations, foreign investors and U.S. households. Based on the report, companies will spend $470 billion on stocks in 2020. Foreign investors will also continue investing in stocks, and next year they will spend $50 billion.
The third group, which consists of U.S. households will inject $30 billion in 2020.
Three big buyers and stocks
The primary buyer without a doubt will be corporations. In 2020, buyback spending will continue, and the number of acquisitions is going to increase. Both of these factors are important when it comes to equity demand.
As mentioned above, corporations will spend $470 billion through a share repurchase program as well as for the M&A spending. Based on this report we can conclude that bottom-line growth is going by 6% in 2020. It means that in comparison with 2019 this number is going to increase by 3%.
Goldman Sachs estimates that out of 11 S&P sectors. The highest percentage of buyback spending will be among technology companies, followed by energy and utilities companies.
It is worth mentioning that the investment bank also pointed out that $470 billion represents a 2% decline in comparison with 2019.
Let’s move to the second main buyer as foreign investors will invest $50 billion in U.S. stocks. According to economists from Goldman Sachs, the dollar will weaken by 3% in 2020. This is good news for stocks as a weak dollar will support foreign investment.
In 2020, the bank predicts that foreign investors will pull a $175 billion from the stock market.
One of the factors which will affect the stock market is the trade war between the U.S. and China.
The third major buyer will be U.S. households. Next year, households will invest $30 billion in U.S. stocks.
