The Australian stock market is expected to be weak in the first half of 2015, but could turn around if the Australian dollar continues to fall, says Clime Asset Management.
In the fund manager’s investor outlook for 2015, Clime Asset management said it expects Australia’s deteriorating trade position on the back of falling commodity prices to lead to depressed economic growth.
“Given this view we expect that the Australian market will remain weak into the first half of [the 2015 calendar year],” Clime Asset Management executive director and chief investment officer John Abernethy said.
Mr Abernethy said he expects the Australian equity market will trade about 5,000 points, but the market could increase above current levels of 5,200 if the Australian dollar falls below 75 US cents, which would attract foreign buyers to the market.
“Investors will need to monitor the market and the forecasts are based on iron ore, coal and energy prices maintaining current levels,” Mr Abernethy said.
“But we see no reason why the dollar will not continue to devalue against most major currencies in 2015.”
“The exception will continue to be the Japanese Yen which is being debased by its massive QE policy settings,” he said.
Commenting further on its outlook for 2015, Mr Abernathy highlighted that six years of “unrelenting supportive monetary policy” settings in the US, Europe and Japan has “failed to stimulate” economic growth, but has instead created a “chaotic” global economic and investment outlook.