While 2022 was dominated by resources winners, Australia’s top strategists are turning elsewhere for alpha to outrun another year of mediocre sharemarket returns.
Australian stocks face renewed volatility and subdued returns in what is shaping up as a low-growth year.P/ASX 200 is headed for a lacklustre 12 months in what many strategists frame as a tale of two halves, following a calendar year loss of 5.5 per cent in 2022, or a 1.1 per cent loss on a total return basis including the value of dividends paid, according to Refinitiv data.
President Xi Jinping warned tough challenges remained in China’s fight against COVID-19. The Lunar New Year holiday begins on January 21.
“When you consider that the transitory inflation narrative is returning as global supply chains ease, the profitable end of technology indexes are looking quite interesting as a momentum reversal trade,” he said. The February reporting season should also mark the return of capital raisings as companies looked to be first in the queue, Ms Jorritsma predicted, with the REITs expected to kick things off.
“[This year] is likely to see a sharp easing in inflation pressures, central banks moving to get off the brakes and towards the accelerator, and economic growth proving stronger than feared,” said AMP’s head of investment strategy, Shane Oliver., Dr Oliver predicted, helped by stronger growth than other developed economies, and a robust recovery in China which would support commodity prices.
“The multiple de-rating is done, but investors should brace for impact from the lagged effects of an aggressive tightening cycle,” warned Chris Nicol, head of Australian strategy at Morgan Stanley.
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