- JPMorgan's Marko Kolanovic told CNBC that
value stocks will soon rebound. - The top-rated equity strategist said this
rotation will occur after the election regardless of who is elected president, because an economic reopening will occur no matter who is in the White House. - Investors should rotate to materials and industrials if Biden wins, while seeking energy and financials stocks if Trump remains in office, Kolanovic said.
Marko Kolanovic, a top-rated equity strategist at JPMorgan, told CNBC on Tuesday that beaten-down value stocks will soon rebound.
The global head of macro quantitative and derivatives strategy said there will be two catalysts for this rotation into value stocks. One will be the introduction of a coronavirus vaccine, which is likely to occur in the next three months. The other catalyst will be a reopening of the economy, and this will occur after the US election "no matter who is president."
"We think those two catalysts will be catalysts for value, and we think it's going to have legs," Kolanovic said.
"The decline of Covid should be a powerful catalyst for value," he added.
While the strategist said value stocks will rise regardless of who wins the election, he sees specific sectors that will gain depending on who takes control of the White House.
Democratic presidential nominee Joe Biden may potentially pass infrastructure legislation, Kolanovic added, so materials and industrial stocks will likely perform well. Value stocks that would gain under another four years of President Trump could be energy and financials, due to Trump's policies on deregulation, said the strategist.
JPMorgan raised its year-end S&P 500 forecast to 3,600 from 3,400. Kolanovic said the firm bumped the target after the market pulled back in September. The index traded 0.47% higher to 3,459.44 Wednesday.
"We're still broadly positive on equities," the strategist said. "We still think there is an upside."