The global resources company BHP Billiton (BLT) is a key stock to watch in 2016, say stockbrokers and investment managers at Redmayne Bentley. The Anglo-Australian miner?s shares may have slumped through 2015, thanks to mining sector struggles, yet it remains the pick to do well in the year ahead, according to the broker's Annual Broker Survey.
BHP's share price is currently trading at 783.1p, up 5p today, but that's far cry from the £12.105 level at which it begun 2015.
The Redmayne survey also flags banking group Lloyds (LLOY) as a FTSE 100 stock to watch, with the sale of part of the government?s 9.9% stake in the company due to take place in the spring.
Favourite FTSE 100's for 2016 (% of brokers/mangers voting)
BHP Billiton (BLT) 12%
Lloyds (LLOY) 9%
Rolls Royce (RR.) 5%
Rio Tinto (RIO) 5%
ARM (ARM) 5%
BT (BT.A) 5%
This corresponds with a healthy 39% of those surveyed that see a positive year ahead for the UK benchmark FTSE 100 index. That compares with just 12% that have a negative mindset over the future prospects of Britain's blue-chips, but most of the respondents are noted as 'crabbish', presumably fence-sitting neutrals.
While 2015 was the year that the FTSE 100 finally jumped beyond the 7,000 barrier, Redmayne does not, overall, predict a repeat of this next year. On average, those surveyed said the FTSE 100 would hit a high of a high of 6,895, dipping to a low of 5,722.
On balance, the best prospects for returns in 2016 will be among the midcaps, with a little more than half of the investment number crunchers canvassed believing that the FTSE 250 index will enjoy the best of the gains through 2016. A little less, 44%, reckon small caps will be the place to stash your cash in the year ahead, an under-researched part of the market where Shares, arguably, adds the most value to readers.
The year?s top bull issue is predicted to be continuing low interest rates, according to Redmayne. While the US Fed finally pulled the trigger and raised interest rates Stateside by a quarter percentage point on 16 December, the Bank of England has shown little sign that it plans to follow that lead any time soon.
Top ranking Bull and Bear issues
Bull | % | Bear | |
Low interest rates to continue | 75 | China?s continued slowdown | 77 |
US economic growth | 65 | Slowing global economic growth | 72 |
More central bank stimulus | 60 | Deflation concerns | 53 |
No looming recession | 49 | Company earnings slowdown | 42 |
Company earnings growth | 35 | Higher interest rates | 40 |
China remains the elephant in the room. The continued slowdown of Chinese markets is predicted to be a big bear issue in 2016, according to Tim Whitehead, investment manager at Redmayne Bentley.
'China?s economic fortunes will continue to significantly influence the direction of global equity markets through 2016,' he says. 'Expectations of lower Chinese growth have pushed down the price of crude oil and industrial commodities, such as iron ore and copper. Western stock markets are inextricably linked with the health of the Chinese economy and, consequently, it will be monitored closely in the year ahead,' says Whitehead.
