Pramit Ghose of Bloxam Stockbrokers looks into his crystal ball and predicts some surprises for 2010:
- The US stockmarket trades in a 30% range in 2010 with the benchmark S&P500 Index trading between 975 and 1,300 (currently 1,100), ending the year up a modest 5%-7%. The positive momentum of new money flows and continuing profits recovery is offset by disappointingly modest economic growth.
- The US Dollar continues to strengthen, reaching $1.30 against the Euro at some stage.
- Gold retreats to $900-$950 an ounce from its current level of $1,130, as investors’ love affair with gold wanes due to a more stable economic environment and investors’ renewed appetite for income producing assets.
- The two major Irish Banks’ recapitalization plans are greeted enthusiastically by private investors (who currently own about 50% of the banks), thus avoiding nationalization and putting in place a reasonably strong shareholder base for share price recovery over the next few years. Both share prices exceed €3 again at some point in 2010.
- The Irish prime commercial and residential property markets bottom out in the Spring/Summer of 2010, and then start to recover modestly, helped by pent-up demand, attractive yields, renewed international demand and improving mortgage availability. Both markets end 2010 with a positive 7%-10% return, and positive momentum into 2011.
- Following record inflows in 2009 and huge investor expectations, Emerging Markets underperform as ‘the smart money’ moves out early, heightened global tensions cause investors to seek safer havens, and the Chinese authorities raise interest rates significantly to slow an overheated economy.
- There is an unexpected mega-merger of some kind, deemed ‘in the national interest’ e.g. Citigroup and Bank of America or Vodafone and British Telecom.
- Pramit Ghose