2015 Share Market & Equities Outlook – Part 3

Sectors in the 2015 Australian Market – Mining, Retail, Healthcare and more

 

Ben: So let’s look at the sectors. So energy, views on energy.

Michael: Look, energy, the price have dropped – with the price drop that we’ve experienced so far, energy is certainly a subject to the companies …

Ben: So that’s oil price drop.

Michael: Yeah, oil price drops. There’s certainly some value on that.

Ben: Yeah.

Michael: So again, not all companies are built the same or made the same, but there’s certainly some value on some of the larger and stronger oil companies or emerging – sorry, energy companies.

Ben: So that’s one to watch for you.

Michael: That’s right.

 

Mining

Ben: Yeah. What about mining?

Michael: Mining is similar, in a similar vein. Given the price drops, I think that a lot of that has already been factored in.

Ben: Yeah.

Michael: What hasn’t been factored in or what we’re looking at is possibly the impact of additional stimulus in China and greater demand in that space.

Ben: Retail and consumables.

Michael: Retail domestically, I think that we’re in a position where with interest rates being low for probably the last close to two years now, with oil prices coming off. That should add to our consumer spending domestically. So I guess I would probably favour consumer spending or consumer discretionary items. So domestically, we’re probably looking at more cyclical stocks as opposed to the defensives.

Ben: Yeah.

Michael: Yeah.

Ben: So when we say cyclical, give me a little bit of an example.

Michael: So we’re talking about companies that are – their revenue is tied to business activity spending or consumer spending. So things – for example, transportation companies, shifting goods from one …

Ben: Infrastructure type stocks that are doing that type of work. Health and services?

 

Healthcare

Michael: Look, healthcare has probably been the standout last year in the Australian market. It has done very well. Generally, we could argue that it has done well with pricing. The value isn’t necessarily there when we can see the commodities and energy.

Ben: Yeah, yeah, of being …

Michael: So we’re probably more neutral in that.

 

IT and telecommunications

Ben: OK. And finally IT and telecommunications.

Michael: Telecommunication again, that’s probably held up a little bit better than obviously the commodities. It is an area that I’m always looking at partly because of the nature of the companies that are coming out and the products that …

Ben: So both locally and obviously internationally. So let’s wrap up the Australian market then. How do you see that moving on the whole in terms of the indexes?

Michael: Look, the Australian market at this moment, I would say that we’re sitting at a – we’re entering the year at around about 5400. My estimation of my expectation is that the reality is we will probably trade between that 4500 to possibly even 6000 to …

Ben: So some downside but a little bit upside. So a bit lumpy.

Michael: This year more than most is going to be very lumpy in part because we have so many factors, geopolitical.

Ben: Unemployment.

Michael: That’s right.

Ben: Yeah, slowing economy, mining sector, CAPEX expenditure coming off, yeah.

Michael: So both domestically and globally I think that it will be a more volatile year partly because of all the geopolitical positioning that we have with oil, quantitative easing across the globe and stimulus decisions around China. Each one of those will obviously impact some of our markets.

Ben: Yeah.

Michael: But what we can do domestically is again – how long will the oil price stay sub 60?

Ben: Yeah.

Michael: The longer, the better for our consumers.

Ben: Yeah.

Michael: The better for our consumption.

Ben: OK. So let’s wrap it up. It’s going to be a difficult market. 2015 from an equities point of view is going to be a difficult market. Of course there’s going to be some opportunities and that’s obviously the drive of what we do as a profession to try and find those opportunities in the marketplace. So that’s a really important message.

For those of you watching this video, the message is it’s probably more so than ever the best time to get advice from professionals like Michael who actually have inside knowledge and have the time to do the research to find those opportunities as opposed to the rising tide lifting all ships type strategy.

We don’t say that as being the right strategy for 2015 in the equity market. So please do yourself a favour. Make sure if you want to have a conversation with one of our financial planners like Michael, book an appointment with us. It’s quite simple. Just fill out the form on our website and then we will be able to sort of take you through your opportunities.

In every case, that’s a global picture of the market. But we’re also talking about everyone’s circumstances are different and everyone’s risk profiles are different. So having that conversation and getting a tailored plan is what you’re about, isn’t it?

Michael: Absolutely.

Ben: Yeah. So thanks very much for watching our 2015 outlook for the equities and share markets. We’ve hoped you enjoyed this presentation.