Investors facing unhappy new year


Published in the Daily Telegraph, July 2008 by Andrew Carswell

Cue the collective sigh of relief – the hellish investor-bashing 2007-08 is officially over.

But before declaring an end to the rot, analysts warn that volatility will continue to reign on global markets, as will the paralysing uncertainty that has gripped the sharemarket over the past 12 months.

There's also growing speculation that a further fall will occur. And don't forget the crunch on credit, and rise of oil prices. So much for a happy new year, the analysts say.

Yesterday, the local market closed lower after a positive start to the last day of the financial year.

At the close, the benchmark S&P/ASX200 index had fallen 21.7 points, or less than 0.5 per cent, to 5215.3 while the broader All Ordinaries surrendered 16.5 points to 5332.9.

It was a negative end to a negative year, where $400 billion was snatched from the pockets of investors in a 15.8 per cent market tumble - the worst year-on-year fall since 1981-82.

And unless there was a mighty recovery overnight, Wall Street was also set to break records for the wrong reason.

The Dow Jones is set to record its worst June since 1930.

Argo Investments analyst, Chris Hall told The Daily Telegraph the only certain buy of the new year for investors was a crystal ball.

"It is very difficult to forecast because we are in unprecedented times, or at least times we haven't seen for a long time," he said.

"The market has factored in a lot of bad news already but the industrial earnings are still going to be under a fair bit of pressure going forward.  "It is going to be volatile."

Chief analyst for Wealth Within, Dale Gillham, was a touch more positive. "I urge investors to exercise caution now, as there is still a possibility the market could fall away before September," he said.

But overall I believe it will be bullish and I expect the All Ordinaries to peak sometime between March and June 2009 with the opportunities in the coining year most likely in the energy, resources, materials and health care sectors."

Finance and property stocks have been the hardest hit since the market got the jitters last August, both sectors retreating around 50 per cent.

It is those battered sectors that Darryl Gobbett, director of research at Prescott Securities, believes hold the most value in the future.

"I'd be looking at some of the Australian banks, those stocks that have had a really tough time for no apparent reason," he said.

"The banks have been oversold on the back of being tarred with the same brush as the US financials."


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