In his 2014 Market Matters outlook, Mr Hickman predicted a continuing correction in the ASX200 back towards the 3800 point level in early 2014, followed by a sustained rally to fresh highs above 5500 points.
“By the end of 2014, however, I see most major equity markets, including Australia, closing only marginally higher compared to where they are today,” he said.
“The ASX will continue to underperform global peers through 2014, particularly NASDAQ and the S&P500 in the US.”
While 2013 was a year of “yield play”, Mr Hickman does not see this continuing into 2014.
“The past 12 months were governed by low interest rates, a falling Australian dollar and the yield play. From this, I believe, we can be assured that 2014 will not be a year of chasing yield and will indeed be a year of growth,” he said.
“I feel the yield play is very mature and would lighten bank holdings into any fresh highs in 2014.”
Mr Hickman maintains a 30 per cent portfolio weighting in the banks, preferring regional banks to the majors, favouring Bank of Queensland and ANZ for its exposure to growth in Asia.
“Resources will outperform as large capex developments are shelved and strong cashflows are returned to shareholders, the regional banks will outperform their major peers, and regardless of what Qantas tries to do to unlock some of ‘that value’, I will not be investing in the airline sector.
“Insurance stocks look set for ongoing weakness, and need to fall for another 10 per cent before I would look to buy,” he said.
“QBE Limited could be set for a strong 2014 second half, as long as guidance is met, as economic conditions remain perfect for them due to their exposure to the strengthening US dollar.”
How’s that continuing correction to 3800 early in 2014 looking?
Still early days I know. I’ll keep an eye on it for you and report back in a month or so.