Factor #3 – Worries about global growth are hurting investor sentiment
According to a Merrill Lynch survey, fears about a slowdown in global growth are at their highest in nearly a decade.
The Bank of America states that ‘Investors are holding onto more cash’.
The two biggest factors driving these fears however is the ‘trade wars’ and a slowdown of growth in Chinese manufacturing.
These growth fears will resolve themselves in time – but not before year end.
All three of these factors holding back the stock market will resolve themselves in time.
I expect the trump trade wars to reach an end and for sanity to prevail. This will see an increase in growth for Chinese manufacturing.
And oil prices will remain lower for longer as well. That will curb inflation and keep interest rates low.
As this happens – there will be more interest in stock markets again, and less in fixed interest investments…
Lastly, South Africa’s political tensions will still put a hamper on
things till the ‘Expropriation without compensation’ matter is resolved.
This won’t happen by year end. But it will be resolved in 2019.
This sets our stock market up for a positive 2019
Shares, especially on the JSE, are very cheap right now.
Many companies are at record high profits with record low
More than 300 shares on the JSE (out of +-450) are negative for
the year. Many of these still grew profits and paid dividends…
And these are the kind of shares you want to hold right now.
You want to buy these shares, ready for a rally in 2019.
Sure, the Santa rally isn’t happing by year end, but 2019 will be different…