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Crystal ball gazing can be seen as a necessary exercise for investment advisers and strategists as it allows them to focus their thoughts, consider various scenarios and evaluate risks and opportunities, Craigs Investment Partners broker Greg Easton says.
Rather than rely too heavily on market predictions, Craigs preferred to consider them as talking points that might encourage some insightful debate and thought.
(1) Returns from shares will again beat fixed income and residential property.
Shares were the best place to invest in 2012, and Craigs thought they would take first place again this year, Mr Easton said. Dividend yields would remain much higher than interest rates, companies were in good financial shape, earnings were growing and investor sentiment was likely to move further in favour of shares.
(2) Australian shares will do better than New Zealand shares.
For the past three years, the New Zealand market has been a much stronger performer than Australia's. That could turn around over the coming years. Australia had cut interest rates aggressively, China was stabilising, Australian shares looked better value than New Zealand shares and sentiment - which was at rock bottom - could only go up. In Australia, Craigs liked companies such as AMP, Spark Infrastructure, ANZ Bank, Seek, Computershare, BHP and Rio Tinto, he said.
(3) The official cash rate will remain unchanged all year.
''We can't see any reason for the Reserve Bank to increase interest rates until sometime in 2014,'' Mr Easton said.
''We might get a bit of growth boost from the Christchurch rebuild but it won't justify any movement in rates, and investors looking for income won't get any reprieve from the current low interest-rate environment.''
While many high-dividend companies had already performed well in the wake of low interest rates, those such as Sky TV, Argosy Property, DNZ Property, Vector and Telecom still looked ''reasonable value'' and should continue to attract attention in 2013.
(4) At least five new companies will list on the NZX.
With or without state-owned enterprises, activity in terms of new listings and opportunities should continue to build. The market was strong, sentiment was high and there was a lot of cash sitting in low-return bank deposits.
''In 2013, we might have the best year for some time when it comes to new investment opportunities. A key beneficiary of this trend will be the NZX,'' Mr Easton said.
(5) China will recover to a growth rate of 8%.
Chinese economic growth for the September quarter was 7.4%, having consistently slowed since the first quarter of 2010. That could well be a turning point and growth in China could start to re-accelerate in 2013.
(6) Growth shares will do better than high-income shares.
Over recent years, the safe, defensive, high-yielding shares had been outstanding performers, Mr Easton said.
''They still look attractive and will hold up well. But we might see a continuing rebound for some of the more cyclical companies such as those in the building sector, those exposed to equity markers or the retailers.''
Under that scenario, the mid-caps and smaller companies might also continue to outperform their larger peers.
(7) The Christchurch rebuild will get properly under way.
After many delays, there are signs of the rebuild process gathering some ''decent'' momentum, he said. That should help economic growth as a whole as well as benefit the construction sector and stocks like Fletcher Building, Opus and Steel & Tube.
(8) Apple shares will go back up to $US650 ($NZ788).
Having hit a high of $US700 in September, Apple shares fell 25% over the following few months. The company remained an outstanding growth opportunity, had no debt and was good value on almost every measure, Mr Easton said.
(9)American house prices will outpace Auckland house prices.
Auckland house prices were great for property investors last year, rising more than 10%. The Auckland market still had strong fundamentals but even the most one-eyed property investor would concede that valuations were beginning to look expensive relative to rents and incomes. American houses were starting to show some strength after many poor years. The wealth effect that would have on sentiment and the US economy was significant.
(10) The New Zealand dollar will fall.
''If ever there was a contrary call at the moment it would be for the New Zealand dollar to weaken or the US dollar to strengthen.''
Like most economists, Craigs' official view was that the currency would remain above US80c this year, but it was worth raising as a scenario because if it did fall, many investors were poorly positioned, Mr Easton said. After the outstanding performance from the local market in 2012, investors had been driven even further into domestic assets.
The kiwi was strong and no-one should be eager to see it collapse. However, some weakness would help exporters and a better-than-expected US economic rebound would see the US dollar recover.
''If nothing else, we should give some consideration to the possibility of international markets outpacing the local market over the coming year and use our strong currency to add some good-quality global companies,'' he said.
1: Recession in Europe, while US economy surprises. Correct
2: No break-up of the eurozone in 2012. Correct
3: No hard landing for China. Correct, but only half a point as Craigs also predicted it would achieve 8% growth when it only got into high sevens.
4: Shares have a positive year. Correct
5: Interest rates remain very low. Correct
6: NZ dollar rises against our major trading partners. Correct
7: Fixed interest does not repeat its 2011 performance. Correct
8: Barack Obama re-elected US president. Correct
9: Mighty River Power might not be only game in town as legislative changes might enable Fonterra to introduce share trading allowing the public to invest. Correct
10: Inflation falls back to low levels. Correct