Jessica Amir
Market Strategist
Summary: In our special edition of stocks to watch, we explore a theme, Australia’s share market as a beneficiary of China’s reopening and rising interest rates. Its market is turned to by international investors as a dividend, financial and commodity play, while it’s also deemed a proxy for China's reopening. The market has seen its biggest jump since 2020, benefiting from the rise of iron ore, copper, gold and aluminium prices, while mining giants guide for momentum to be strong in 2023, underpinned by sales to China. With the third largest ETF pool in the Asia Pacific, we explore the stocks and ETFs and baskets to track on the ASX.
Consider the mining sector in its entirety is expected to see the strongest earnings growth for the year of 63% (Bloomberg consensus forecast). If you want to see a list of Australia’s largest Resources companies, refer to Saxo's Australian Resources theme Basket, under Research, Stocks, for inspiration.
Another important factor to consider is that there are 34 ETFs in Australia which have holdings of over 5% of BHP. Just think about this for a second. Two of the biggest resources ETF funds are BetaShares Australian Resources (QRE) with a 40% allocation to BHP, and SPDR S&P/ASX 200 Resources (OZR) ETF with 34% exposure to BHP.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.