Stock market experts tip a big year

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Australian Broadcasting Corporation

Broadcast: 31/01/2011


Five stock market experts give their predictions on where the market is heading this year, tipping a big rise.


TICKY FULLERTON, PRESENTER: The stock market has had a reasonably strong start to 2011, so the big question is, will it continue?

There are many potential storm clouds ahead for investors: interest rate rises, upheaval overseas, Europe's debt woes, China and our own natural disasters.

Well, five brave experts have put their heads up over the parapet and been willing to predict where they see the market heading this year, and here's what they had to say.

ANDREW PEASE, RUSSELL INVESTMENTS: Well we think there's still scope for some modest earnings growth in this country, but really it's the valuation story more than anything else.

And when we look at the various valuation metrics for the Australian share market, we certainly can't make the case that it's overwhelmingly cheap anymore, but it certainly doesn't look expensive either.

So we're seeing valuations as relatively neutral in a year which we should get modest profit growth which means that we should end up with a modest gain on the share market.

NICK HUTLEY, ACCESS ECONOMICS: I see the ASX 200 at the end of this year at about 5,500. I think it was held back, particularly in the banks and industrials last year, more by sentiment than reality.

There is a strong growth picture in this country, there's strong dividends, Ps by historical standards are not high and I think that will drive the market forward, particularly if we see the currency come off a little bit.

MATTHEW SHERWOOD, PERPETUAL: I'd expect to see the S&P ASX200 at around 5,250 by the end of the year.

At this stage it does appear the Australian economy is going through a soft patch which we think will continue well into the first half of the year. In the second half of the year also we're expecting to see quite a moderation in the Chinese economy, and of course they're quite a primary driver of trends in the Australian share market.

So, we tend to think that the market might drift sideways for the first six months or so of the year and then we'll start to move upwards as the mining and reconstruction boom gets underway.

BESA DEDA, ST GEORGE BANK: We think the ASX will finish this year at 5,600, which is about a 15 per cent increase on the previous year.

A few key reasons for that: firstly, the Australian economic recovery story will continue, supported by the mining investment boom. In particular that will benefit the resources stock.

Further, as we move into 2011, the reconstruction activity that will be underway in Queensland as a result of the floods will also benefit companies that are linked to those sectors.

NIGEL STAPLEDON, UNSW: I think I'd see it at about sort of 5,250. So, a rise over the year. Why do I think that's going to happen? Domestically, I think the story is pretty much factored in.

The resources boom is going to remain the dominant influence on the economy and remain significantly positive.

You're overlaying that with a sort of a demand shock, a positive demand shock from the significant floods which are of course causing short-term damage to the economy, but will be a positive in the second half of the year.

TICKY FULLERTON: So there you have it: all our experts are tipping a substantial rise in the stock market this year.

Tomorrow night, our experts will be predicting this year's interest rates, and that will be very timely, with the Reserve Bank board meeting tomorrow.

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Stock market experts tip a big year

Stock market experts tip a big year

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