Market experts say Australian shares will rebound in 2021

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The hardest hit stocks in 2020 are expected to recover this year.

As that old saying goes, “hindsight is 20/20”, and it certainly applies to the share market every year.

Let’s assume you a had a time machine, and travelled back to January 1 (last year) to buy shares as part of a retrospective “get rich quick” scheme.

Certain stocks might have earned you a truckload of money if you sold them just before last night’s New Years’ Eve fireworks.

These “missed opportunities” include Marley Spoon (+980pc), Temple & Webster (+307pc), Afterpay (+303pc) and Kogan (+150pc). All of them benefited from the pandemic-driven shift to online shopping.

Given how much they rose, it’s unlikely those gains will be replicated this year.

ABC News spoke with several market analysts about their thoughts on where the Australian market is headed.

Even the least optimistic person was quite “optimistic”, as they estimated the ASX 200 could lift by about 10 to 13 per cent this year.

That’s compared to the 1.5 per cent loss the benchmark index sustained in 2020.

They based their assumptions on a COVID-19 vaccine being rolled out within months, the Government and Reserve Bank pumping more stimulus into the economy, and the hardest-hit sectors making a recovery.

Here are some of their forecasts for the year ahead — but please remember to also do your own research, and obtain independent financial advice.

Shane Oliver (AMP Capital, chief economist)

“I think that the big story in the year ahead is a lot of the winners from 2020, or more from the pandemic at least, won’t do as well as we go into economic recovery.

“I think the environment we’re coming into is the one where cyclical stocks will be the star performers — banks, industrials, mining companies, energy companies.

“And stocks which at least initially benefited from the pandemic and lockdowns, such as healthcare and IT stocks will probably take a bit of a backseat.”

Kyle Rodda (IG Markets, market analyst)

“I think our market’s strength will be led for the first part of the year by bank and energy stocks.

“Bank stocks still have the capacity to climb as the local economy recovers.

“The reopening of the global economy ought to lift energy demand and benefit what’s generally been an underperforming sector for most of this year.”

Craig Sidney (Shaw & Partners, senior investment adviser)

“I am hopeful of a recovery in the banking sector provided bad debts remain subdued, NIM [net interest margins] remain stable and loan growth shows signs of improvement.

“Energy should also outperform if global economies reopen and demand for oil and gas improve.”

NAB, Westpac, Santos, Woodside Petroleum, Telstra and CIMIC Group were some of the stocks Mr Sidney said he would watch closely — given they are “blue chip” stocks which suffered heavy falls last year.

A man holds a piece of iron ore in front of a remote-controlled truck in Sheila Valley, WA.

The price of iron ore is trading at a near eight-year high as China supercharges its spending on infrastructure, which requires steel, which relies on iron ore from Australia.(Reuters: David Gray)

Danielle Ecuyer (Shareplicity, author)

“Although the rising Australian dollar is a headwind to our economic recovery and those companies that earn US dollars, I think the quality healthcare shares, such as CSL, Cochlear and Ramsay will benefit from the rollout of the vaccines.

“I think shares exposed to the Australian housing market will do well, including Australian Finance Group and Liberty Finance.

“I remain wary about travel and shares related to international tourism, as I think the virus will continue to be an obstacle to any return to normal, in spite of the vaccine rollouts.

“I would buy Mineral Resources and Fortescue Metals on a pullback in the iron ore price and weakness. There will be some good dividends from the iron ore plays.”

Chris Weston (Pepperstone, head of research)

Mr Weston is optimistic about cyclical sectors, like energy and materials, as “inflationary pressures should become more of a consideration” as the year progresses.

“Central bank debasement will remain a continued theme, and if the US dollar continues to trend weaker then it limits global central banks to do anything other than stay in lock-step with the Federal Reserve,” he said.

“This leads to gold miners as a hedge against the madness in central banking regimes.

“With dividend income improving, banks should work fairly well in 2021 and should offer benchmark returns.

“With the Aussie economy growing closer to 4 per cent in 2021 we should have greater confidence to hold exposures in this space.”

 
Youtube The Cost of 2020

Chris Pedersen (Pedersen Asset Management, CEO)

Mr Pedersen is expecting banking stocks to recover as their “dividend growth rates are looking very attractive”.

“Dividends will start going back to where they were in 2019, if we take long-term view — up to 2024,” he said.

“Iron ore miners have been phenomenally strong lately — their free cashflow is ridiculously high.

“I’d continue owning iron ore companies until global supply starts increasing to the point where there is more supply than demand … probably towards the end of 2021.”

Jun Bei Liu (Tribeca Investment Partners, lead portfolio manager)

“Tech is expensive. However, in a world where growth is harder to come by, they will hold their value. I’m a believer of buy now, pay later, so we like Afterpay.

“In the next 12 months, we expect it to outperform, combined with some beaten-down sectors.”

Ms Liu is also expecting property trust shares to recover this year as “foot traffic will return” to shopping centres.

She was also optimistic about private hospitals, including Ramsay Healthcare, and “premium assets” like Sydney Airport, which she expects to “lead the returns over the next 12 months”.

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