J.P. Morgan Latin America Survey: Consensus is extremely strong! 84% of investors believe the market can still rise this year, with more than 20% upside remaining in the bull market, while 45% think there will be a 30% correction next year.

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Market consensus is converging in the same direction with rare intensity—and historical experience shows this is often a signal of risk accumulation.

According to Wind Chasing Trading Desk, the Eduardo Lecubarri team of J.P. Morgan strategists recently completed a Latin American roadshow, lasting five days, visiting five cities, and engaging in in-depth discussions with 56 investors, resulting in a research report mapping current global market consensus.

The survey results indicate that investor sentiment is generally bullish: 92% of respondents expect positive returns in the stock market by 2026, 84% believe the current bull market has more than 20% upside remaining, and AI is widely seen as the core upward driver. However, under the optimistic sentiment, undercurrents are flowing—54% of respondents expect a deep market correction of more than 30% this year or next, with 45% pointing to 2027 as the timing.

J.P. Morgan strategists directly highlight the potential risks of this consensus structure in the report: “The consensus views are extremely strong... and this usually means it doesn’t take much to shake things up.” The report points out that in European equities, emerging markets over-allocation, and small-cap under-allocation, the market exhibits highly consistent directional positioning, and this extreme consensus itself forms a source of market vulnerability.

The bull market consensus is strong, but the upside has become narrow

Surveyed investors generally hold an optimistic outlook on the stock market for 2026. 92% of respondents expect positive stock returns this year, but none expect gains exceeding 20%, meaning most markets’ expected returns for the rest of the year will fall into the single-digit range.

Regarding bull market upside, 84% of respondents believe the current bull market has more than 20% upside to its peak, and among them, 17% expect gains over 30% to the peak. Technology and AI are seen as the main upward catalysts, and 75% of respondents think the tech sector still has more than 20% upside before reaching bubble territory.

However, optimistic expectations coexist with tail risks. 54% of respondents expect a steep market correction of over 30% in 2026 or 2027, with 9% seeing a correction happening this year and 45% pointing to 2027. This data indicates that while most investors are enjoying the bull market’s benefits, they have integrated deep corrections into mid-term scenario planning.

Three extreme consensuses: Europe is completely abandoned, Emerging markets are overwhelmingly over-allocated

This survey reveals several highly concentrated directional consensuses, which J.P. Morgan strategists warns are themselves worthy of attention.

Europe faces 100% under-allocation. Among all respondents, none are willing to over-allocate European equities relative to the U.S.—this is a 100% consensus. Eduardo Lecubarri’s team agrees with this view at the regional allocation level, maintaining an overweight on U.S. small/mid caps and an underweight in Europe, but also points out considerable opportunities at the individual stock level among European small/mid caps. Their European model portfolio now contains 22 long targets. Within Europe, 56% of respondents prefer the UK, while 44% prefer continental Europe.

Emerging markets are overwhelmingly over-allocated, but with hidden risks. 75% of respondents overweight emerging markets relative to developed markets, with an extremely high degree of consensus as well. Economists warn of risks: for every 10% rise in oil prices, developed market real GDP growth drops by 14 basis points, and emerging markets drop by 20 basis points—meaning, against the backdrop of current Middle East tensions, the emerging markets over-allocation consensus faces significant potential impact.

Small/medium caps continue to be under-allocated, which strategists see as an opportunity. Only 37% of respondents overweight small/mid cap stocks, an especially low proportion among specialized small/mid cap client groups. The strategists believe this widespread under-allocation forms the basis for excess returns in small/mid cap assets.

Style and sectors: Growth stocks favored, technology leading

In investment style, about two-thirds of respondents currently prefer growth stocks over value stocks, with the ratio about 69% to 31%.

For sector preferences, technology, utilities, and industrials rank as the top three sectors for 2026 among respondents, with technology leading at a 25% mention rate, utilities second at 21.9%, and industrials third at 15.6%. By contrast, communications services, consumer discretionary, real estate, and healthcare are largely under-allocated.

Regarding the China-Japan choice, respondents are clearly divided, with 55% preferring China and 45% preferring Japan—one of the few dimensions in this survey without overwhelming consensus.

Top Alpha opportunities and core risks: AI theme runs throughout

On Alpha opportunities, directions frequently mentioned by respondents include: the Korean market (mentioned repeatedly), AI-related emerging markets, emerging market tech and growth sectors, cybersecurity, Brazil (mentioned repeatedly), and small/mid cap AI names. Some investors also proposed long Nasdaq to hedge Russell 2000 for relative value trades, as well as excess return opportunities in Latin America and Korea relative to Europe.

In thematic trades, AI and its derivatives (AI hardware, AI software, AI and electricity) are the most frequently cited core themes, with electrification and cybersecurity also getting multiple mentions.

For key risks, top concerns among respondents include: geopolitical conflict damaging energy infrastructure (mentioned frequently), higher-than-expected interest rates (mentioned frequently), stubborn inflation (mentioned frequently), excessive AI capital expenditures, spillover effects from war, and economic recession. Some investors even list "overly optimistic expectations" as a risk source itself—echoing the vulnerability of extreme consensus views.

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The above content is from Wind Chasing Trading Desk.

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Risk Warning and DisclaimerThe market has risks, investment needs caution. This article does not constitute personal investment advice, nor does it consider individual users’ special investment goals, financial conditions, or needs. Users should assess whether any opinions, views, or conclusions in this article suit their specific situation. If you invest based on this, you are solely responsible. ```