Shareswatch Australia

There is nothing particularly exciting about the Australian stock market these days. The malaise which has essentially paralysed the government seems to have spread to the business sector which in turn is slowly sucking the lifeblood out of the share market. It’s unlikely that things will improve soon and so investors should prepare themselves for the market to move lower over the next few months.

At the start of last year I did not update my Australian stock market trends simply because I thought the market was basically going nowhere. This year however I feel it is worth looking at some interesting sectors again in an attempt to pick out some areas where investors might be able to find bargains and position themselves for the next bull market.

The ASX All Ordinaries Index and S&P/ASX 200 Index finished much lower than I expected in 2011, so this makes me somewhat reluctant to go on record and make an Australian stock market forecast for 2012. However the process of looking at the various economic data and trying to guess where the market will end is a useful one, so foolishly I will outline once again my Australian stock market forecast for the year ahead.

Often it is useful to step away from looking at the daily movements of the stock market and review what has happened over the last decade.  This won’t exactly tell investors which stocks will do well during the next 10 years, but it does show which trends have moved the market to where it is now.

For around a year or so I have gradually become more cautious about the outlook for the Chinese economy despite the assurances from mining company executives, the RBA and Wayne Swan amongst others that all is well. Without doubt the rapid development of the major cities in China has been nothing short of spectacular but surely we must ask ourselves: is this rapid growth sustainable over the long term?

We are almost through a third of 2011 and the mood across global markets appears to be decidedly downbeat.  The bullish voices of late 2010 have now faded and even the Reserve Bank of Australia and Federal Treasurer are sounding cautious. But don’t be fooled by the talk that recent events have caused the global economy to face headwinds because the reality is that 2011 was always going to be a tough year.

The following links and documents are from the ASX (Australian Securities Exchange) website. You can access all these links, associated documents and the stock price charting tool without having to log into the ASX website.

Fosters Group Limited (ASX:FGL) is a blue-chip ASX-listed Australian beverage company with a wide range of brands covering beer, wine, spirits and ciders.  Over the last few years the company has faced a number of challenges and is now in the process of trying to improve it’s underlying business and deliver better value for shareholders.

Often lost in the debate about house and home prices in Australia is the discussion regarding if our national obsession with housing is good or bad for the overall economy.  Instead of rejoicing that residential real estate prices in Australia rose during the global financial crisis, maybe we should be looking a little closer at why prices are rising to see what problems this might be causing.

As another year starts it’s time for me to make another stock market forecast, one which I will probably regret making in just a few months time. Generally speaking, I expect that 2011 is not going to be particularly kind to the Australian economy and therefore my Australian stock market forecast is not going to make market bulls very happy.

Welcome to the Shareswatch Australia – one of Australia’s premier stock market and investment blogs plus a free source of independent stock market investing views and analysis.

It may not appear to some investors that the stock market is functioning normally again, but the manner by which the  recent correction was quickly reversed indicates that in fact things are getting back to normal. Certainly there is a long way to go before the ASX All Ordinaries crawls back up to 2007 levels, but at least now a correction is just a correction and not the start of a massive wave of panicked selling.

Over the last week the Australian stock market has taken a turn downwards pretty much inline with markets across Asia, Europe and the U.S.  Once again no mater how much the RBA talks up our economy, the fact is that Australia’s economic health depends on how our major trading partners are doing and investors are starting to get worried about the global economic outlook.

The current downturn in the world markets presents us with an opportunity to review or develop our investment strategy for the next few years. For some people it may mean a major overhaul such as moving from stocks to real estate, while for others it may mean just a realignment of stocks in a portfolio.

Recently you have probably noticed that gold prices are getting plenty of media coverage and we are often hearing predictions that gold will hit $2000 USD an ounce in the not too distant future. Sadly what is often not highlighted is that gold is rising mainly because the U.S. dollar is falling and that the demand for gold is largely being supported up by investors.

If you were to believe the various ramblings of Kevin Rudd, Wayne Swan, Glenn Stevens and Ken Henry, then you would be under the impression that the Australian economy is about to power ahead in 2010. But if the IMF expects global growth to be slow, why would Australia be set to do any better?