Good market news
Published in Sunshine Coast Daily, January 2011
With 2010 now a memory, all eyes are on what will unfold on the share market in 2011.
Where will the money go this year? And what stocks and sectors should investors keep a close eye on?
Wealth Within chief analyst Dale Gillham, one of Australia's most respected share market commentators, has nominated the sectors he believes will flourish.
"For 2011 I expect money to continue to flow into IT, materials, energy and industrials in the early part of 2011," he said.
"Consumer staples, financials and consumer discretionary will eventually attract investment; however, this is likely to be off to a slow start. ANZ, SUN in financials and LLC on the property side will be preferred over property trusts.
"The recent banking reforms include approval for the banks to issue covered bonds which are expected to be a big win for the banks.
"On the flip side, funding is expected to get tighter, and the banks have to deal possible loan defaults and other flow-on effects created by the flood crisis.
The big two, Westpac and CBA, will feel this the hardest, and therefore are unlikely to be amongst the big performers this year."
He favoured Newscorp among the media stocks, with ad markets slowly recovering and employment statistics improving.
Mr Gillham said mining, materials, energy and industrials would all benefit from some big deals planned for 2011.
"There is still strong demand for coal and coal seam gas, and we should see gold continue to rise at least in the short term, therefore opportunities may arise in these areas.
"The Australian dollar plays a big part in commodities pricing and we expect the AUD will continue to be strong this year, rising to between $1.00 and $1.20 with our preferred target around $1.16.
"Many industrials will get the flow-on benefits of the continuation of the mining boom in the first quarter 2011.
However, I think the MRRT will come back into the limelight as the government works to put in place the legislation this year.
This may create jitters across the market towards the end of the first quarter of 2011.
"We should see the market break above 5000 points to 5200 points before turning down for around six to eight weeks to form a yearly low sometime around March or April.
"The fall is likely to be in the order of 10%. Once this occurs, money is then likely to flow back into the market with further gains likely through to mid-year and possibly into the third quarter of 2011."
GILLHAM'S HOT STOCK PREDICTIONS
- MATERIALS: IPL
- IT: CPU
- INDUSTRIALS: LEI
- ENERGY: BLY, CTX
- BANKING: ANZ, SUN
- MINING: BHP, RIO, NCM
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