2022 predictions: 5 investing forecasts for the year ahead

Australian currency fanned out and a person touching a smart screen showing generic stock price tracking,
Here is what the experts will be watching closely in markets next year. (Source: Getty)

In yet another year plagued by coronavirus lockdowns and border closures, it’s no wonder global markets saw some volatility in 2021.

But with the outlook (hopefully) looking more positive next year, what sectors in the market are set to get a boost?

Yahoo Finance asked the experts what areas of the stock market they’ll be watching carefully next year.

Commodities (such as iron ore, copper, coal etc), the reopening of borders and China seem to be recurring themes to keep an eye on.

Here is what they had to say.

Mathan Somasundaram - CEO Deep Data Analytics

“I think cyclical growth recovery stories and commodities are likely to outperform.”

We are going to see a bigger rotation out of growth to value but certain growth thematics are too early in the cycle and will remain in play.

It is going to be very tricky in 2022. We are coming in at historical high multiples and moving into a deleveraging cycle.

Stock and sector selection is going to be key and you need to be nimble as macro volatility is likely to remain elevated. China will be key to sector selection in 2022 - much more than the US.

Kyle Rodda - Market analyst, IG Markets

“For me, it’s going to be the miners that’ll make or break the market.”

I think that because it's been a drop in the big miners that’s weighed on the overall market and driven an underperformance versus international equities.

That all hinges on what Chinese policymakers do to stimulate their economy. The reopening trade will also be interesting – the travel stocks, airlines, etc could remain volatile as the pandemic persists.

Gaurav Sodhi - deputy head of research, InvestSMART

“Retailers and travel stocks will be interesting.”

There are two big things for me; one is that interest rates are rising for the first time in 12 years.

At the same time, we have historically stretched valuations in tech and software. I don't think those two facts will sit well together next year.

Tech stocks and those with big valuations will be under pressure.

The second thing to watch is how consumers who are cashed up (savings rate has rarely been higher) will spend that money.

Shane Oliver - chief economist, AMP Capital

“The big one will be stocks that benefit from reopening.”

Right now, we're in the midst of another coronavirus wave, like we always seem to be, but it seems that each progressive wave is getting less threatening to the global economy.

The lockdowns in New South Wales and Victoria recently had a less negative impact on the economy than lockdowns early last year.

And likewise, the number of people who get seriously ill and have to go to hospital is getting less and less because of the medical advancements in treating COVID.

So, while there is a lot of uncertainty around now with Omicron, the basic picture is that we’re progressing towards getting things under control.

That is a positive sign and suggests that the broad trend, even though it's two steps forward and one step back, will be towards reopening, which ultimately is good for travel stocks and good for cyclicals, like industrials.

It will also likely be good for material companies as well - BHP and Rio will probably do reasonably well again next year.

Greg Rubin, head of trading, Global Prime

“It’s shaping up to be a very volatile year for cryptos.”

My expectation is for the bull run that started in 2020 to come to an end next year.

I still believe it is likely to see one more big push higher before the bear market sets in and therefore, we could witness a very large range for prices next year.

With the recent weakness in Bitcoin, there have been quite a few who have already written it off, calling the highs struck in the US$69k region as the top in this cycle.

As long as we can hold above the US$13,880 level, we could see one more push higher to complete the move.

Bitcoin almost always ends its bull run with a blow-off top which makes predicting exact levels very difficult.

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