http://www.copyright link/markets/e...ys-maverick-richard-coppleson-20170105-gtmt8e
- Updated Jan 6 2017 at 4:30 PM
ASX: great year ahead says maverick Richard Coppleson
http://www.copyright link/content/dam/images/g/q/m/6/5/7/image.related.afrArticleLead.620x350.gtmt8e.png/1483680724205.jpg
Richard Coppleson warns by the end of the year the local economy will be so strong that the Reserve Bank of Australia will be hiking interest rates. Daniel Munoz
http://www.copyright link/content/dam/images/1/4/1/y/s/n/image.imgtype.afrAuthorAvatar.120x120.png/1435901920075.png
by
Philip Baker
If Richard Coppleson – author of the closely followed Coppo Report – is right, then
investors should buy shares in TPG Telecom, Catapult Group International, Event Hospitality and Entertainment, Woolworths, National Australia Bank, Challenger, BHP Billiton, Rio Tinto, South 32
and The a2 Milk Company.
They are some of his top picks for 2017. It's set to be a good year for the sharemarket,
says Bell Potter's veteran stockbroker, with the major
S&P ASX 200 index headed for 6300, a gain of close to 10 per cent from its current level.
Coppleson also expects the resources sector to do well over the next 12 months. He thinks copper will be the best performing commodity, favouring Sandfire Resources and OZ Minerals.
Coppleson points out that historically January and, more recently, February are usually good months for the sharemarket and it won't be any different this year.
Indeed, one of the better trades since 2000 has been to
buy any sell-off that takes place in January and sell the position three months later.
It's probably not surprising but he also reckons most other brokers are too cautious in their outlook for the next 12 months, although he warns by the end of the year the local economy will be so strong that the Reserve Bank of Australia will be hiking interest rates.
"There's also going to be earnings per share growth for the first time in years here in Australia, while the world is going to grow at its best rate in five years and then on top of that is Trump and his growth policies" says Coppleson.
He says the current state of play for the sharemarket has some strong parallels with what happened back in 2003 and 2004.
Like now, there weren't many
analysts then who could see any economic growth, which had them all very wary about just how far the major index could rise.
Indeed, most had the major index flat or down slightly – but in the end it rose 9.7 per cent in 2003 and then went on to gain another 22 per cent in 2004.
"I was made to feel like an idiot back then for even being bullish – as it was obvious to 'everyone' that it was not a real rally," he recalled in his note this week.
But it was real and he's convinced that 2017 will be a good year for the market, it's just that "no one seems to see it yet".
This week for the first time in five years economists at HSBC increased their forecast for global growth and inflation for 2017 and 2018.
A rebound in global manufacturing activity,
a healthy Chinese economy and the fiscal kick from a Donald Trump-led United States will all help boost economic growth.
It will be interesting to see how much goodwill there is in the US once the latest non-farm payrolls are released on Friday night.
It all comes as reports indicate that the UK economy is in much better shape than many had thought after the country surprised everyone in June when it voted to leave the European Union.
Wall Street has been quick to announce the end of the earnings slump of the past few years, but even quicker to price in as a given the future earnings growth from a drop in the corporate tax rate and a generally more business-friendly environment in the US.
Being optimistic about future earnings growth is one thing, but investors also need to understand that companies in the US face a few challenges that might put a halt to the Wall Street-inspired rally in global sharemarkets.
The US is facing a decent increase in real interest rates for the first time in years and potentially higher labor costs at the same time.
Without the help of the world's largest and most powerful central bank, there's now going to be a wider range of performances from sharemarkets around the world.
(20min delay)