$165 Billion Stock Sell-Off Could Hit Markets Before June Ends
Global equity markets could face up to $165 billion in selling before the end of June. According to JPMorgan strategists, quarter-end portfolio rebalancing by major institutional investors may trigger a significant wave of stock sales.
The expected activity comes after a strong period for equities. As stock prices have risen, equities now represent a larger share of many institutional portfolios. Pension funds, sovereign wealth funds and central banks may therefore need to sell stocks and increase their bond holdings to restore their target allocations.
U.S. Pension Funds Could Sell $55 Billion in Stocks
U.S. defined benefit pension funds may contribute approximately $55 billion to the projected equity selling.
These funds collectively manage around $9.6 trillion in assets. However, JPMorgan’s estimate assumes that only about one-sixth of the total potential rebalancing requirement will result in actual trades.
Historically, pension funds have followed less rigid rebalancing practices than investment vehicles governed by strict allocation rules. As a result, their selling activity may remain below the full amount suggested by recent market movements.
Japan’s GPIF May Shift $60 Billion Into Bonds
Japan’s Government Pension Investment Fund could become the largest contributor to the anticipated selling pressure.
The fund manages approximately $1.9 trillion in assets. JPMorgan estimates that it may sell around $60 billion in global equities before purchasing a similar amount of bonds.
This adjustment would help the fund return its portfolio to its intended balance between stocks and fixed-income investments.
Norway’s Sovereign Wealth Fund Could Sell $40 Billion
Norges Bank, which oversees Norway’s approximately $2.1 trillion sovereign wealth fund, may sell close to $40 billion in equities.
The potential transaction would move the fund’s portfolio closer to its target asset allocation for the end of 2025. Due to the fund’s enormous size, even a relatively small allocation change can create substantial trading flows across global markets.
Swiss National Bank Selling Could Reach $25 Billion
The Swiss National Bank may also contribute to the quarter-end stock market selling.
Its equity allocation increased to 28% during the first quarter, compared with its previous stable level of around 25%. JPMorgan estimates that returning to the lower allocation could require approximately $25 billion in stock sales.
However, the final figure will depend on the central bank’s updated investment target. Should the Swiss National Bank raise its equity allocation to 30%, the estimated selling requirement could fall to around $8 billion.
Balanced Mutual Funds May Partially Offset the Selling
Not every major investor is expected to sell stocks. Balanced mutual funds could provide a partial offset by purchasing approximately $15 billion in equities.
This category manages an estimated $4 trillion in assets and generally follows stricter monthly rebalancing schedules. Global equity returns have remained relatively flat so far this month, while bonds have posted modest gains.
These market movements could encourage balanced funds to reduce their bond exposure and increase their equity holdings. Nevertheless, the projected buying would only offset a small portion of the wider institutional selling expected before the June quarter ends.
