Predictions For 2013 – Part 4 FTSE 100
15th January 2013
2012 Prediction: end the year 6,000
2012 Close: 5,897 (up 5.83%)
Always the most difficult to predict given recent volatility across the globe, we really did nearly get this bang on target.
The inability of US politicians to act sensibly meant some tense end of year drama over the infamous “Fiscal Cliff” that could have caused more than a bit of trouble for their economy and the ramifications that would bring elsewhere.
However, a last minute “deal” seemed to stop the “Thelma & Louise” moment and helped the FTSE to ease through the 6,000 barrier a couple of days later than our prediction.
In fact, December represented the 7th straight month of gains for the Index which represented the longest consecutive monthly run of gains since February 2005.
Overall the FTSE was 6% up on the start of the year, held back by mining shares amongst others and behind the 15% rise in France’s CAC and the 30% increase in Germany’s DAX.
Goldman Sachs, who at 5,800 were one of the most accurate of last years’ forecasters, see “a recovery in UK earnings, outpacing subdued global growth” in 2013 and have plumped for a figure up at 6,500. As have Morgan Stanley for that matter, who last year were well out with their predictions at 5,000.
In fact, as Credit Suisse strategist Richard Kersley commented, “equities are our favoured asset class for 2013”.
There are of course many issues that can blow everything off course, but as Paul Kavanagh, partner at Killik & Co states, “Although concerns remain over Euro zone sovereign debt issues, the US “fiscal cliff” and the outlook for the Chinese economy, we believe these headwinds will be outweighed by positive factors such as strong corporate balance sheets, a reasonable valuation and an attractive dividend yield.”
So whilst we will no doubt see another interesting year, we should see the index ultimately leaving the 6,000 level behind at the 6,300 level and heading towards the 6,500 figure. Ceterus paribus of course!
In summary, 2013 looks like a solid, promising year, with the occasional bump and grind. The Olympics’ and Jubilee are behind us, we are all another year more experienced in surviving the current climate and optimism is the new black.
It will no doubt be another year of challenges and hard work, but real progress can be made as long as politicians all over the world decide not to screw things up.
This year is all about working together, being positive and pushing forward.
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Andrew Montlake, Director and Spokesperson for Coreco, gives his honest and forthright views on the mortgage market, economy and all things property related. Monty was voted "Mortgage Personality of the year 2008", "Best Press Spokesperson" in 2011 and is the current holder of the British Mortgage Awards “Best Marketeer” title. Expect expert analysis, delivered in a down to earth style with a side helping of exuberance.