Stock pickers will have opportunities to achieve high returns this year as the domestic market moves away from income plays, according to Prime Value Asset Management.
The pursuit of income was an important theme in the market last year, increasing the price of many income stocks and leaving stock pickers in a better position to profit.
"A lot of the income stocks are now looking quite expensive and I think that introduces opportunities for more cyclical stocks to come under investor's radar screens," Prime Value Australian equities manager ST Wong told InvestorDaily.
"Investors remain cautious but there may be a lift in sentiment on the back of the strong equity market return in 2012," he said.
Despite the take-up in equities, Prime Value remains cautiously optimistic in looking at the 2013 domestic market, which has not seen two double-digit years of performance since prior to the global financial crisis.
Mr Wong said that for the Australian share market to reach the performance levels seen in 2012, rates cuts will need to have a stimulatory effect and company operating conditions will need to improve.
"We are in a transition year. Resources are softening and we need to see the domestic economy pick up," Mr Wong said.
"I think for growth to continue there must be some recovery in company operating conditions and a response to interest rates to support the continuation of the current momentum in the market."
