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Forecast for financial assets for 31 December 2020

2020-12-31

2020-12-31

TOP five investment strategies for 2021. Forecast as of 31.12.2020Dmitri Demidenko

Betting on the victory over the pandemic, the global economy’s rapid growth, and the underestimate, we can find currencies, commodities and stocks that are worth a closer look in 2021.

The article covers the following subjects:

East European currencies

They believe in the market that the euro’s moves in 2021 will be similar to those in 2017. Back then, the [EURUSD][1] soared by 17% amid a lower political risk after Emmanuel Macron’s victory over French eurosceptics, the eurozone’s GDP growing faster than its US peer - for the first time in 10 years -, and Mario Draghi’s hints about monetary policy normalization. Today, the pent-up demand effect, the global trade’s fast growth, the unity within the EU and ECB President Christine Lagarde’s current penchant for hawks let us hope that the major currency pair will continue rallying to at least 1.25-1.27.

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Source: Nordea Markets.

When it comes to East European currencies, in 2017 they looked even better than the euro: the Czech koruna rose by 18.6% and the Polish zloty - by 18%. Only the Hungarian forint “dropped the ball”, consolidating by as little as 13%. I think history will repeat itself. The currencies of the countries whose exports are mainly targeted on the EU will be in their element. So, I recommend selling [USDPLN][2], [USDCZK][3] and [USDHUF][4] on retracements.

Platinum

Platinum has been the worst 2020 performer among precious metals. Its cost rose as little as 11% while palladium, gold and silver grew 20%, 25%, and 49%, respectively. Nevertheless, the [XPTUSD][5] bulls don’t despair and plan to make up for missed profits in 2021. Sixty-two percent of platinum is used in industrial production, with Europe and China accounting for 50% of total demand for autocatalysts. These regions’ fast development in the coming year, producers’ intention to replace expensive materials with cheaper ones (palladium’s cost is 2.2 times higher than platinum’s) and transition to clean energy are drawing a bright future for platinum.

World Platinum Investment Council forecasts that the demand for platinum will exceed the supply by record 1.2 million ounces in 2020. There even will be a deficit for the next few years. According to CRU Group, a hydrogen vehicle will require four times more platinum than modern diesel cars.

Platinum market’s evolution

Source: World Platinum Investment Council.

Oil

Black gold is considered to be an indicator of the global economy’s health. Once it improves, oil prices rise. [Brent ][6]closed the year 2020 with minus 22% and [WTI][7] dropped 21%. The International Energy Agency estimates that the pandemic-driven loss in global demand amounts to nearly 10 million b/d. The demand is expected to grow to 96.9 million b/d (+6 million b/d) next year, still remaining below the pre-crisis value of 100 million b/d.

At the end of 2019, North Sea oil was trading at $65-70 a barrel. I think it can return to those levels - not only because of demand, but also because of limited supply. The US is unlikely to return to its record high production rates, while the OPEC and Russia will be careful as an increase in production can scare investors and destabilise the market. My advice will be buying [Brent][6] and [WTI][7].

FTSE 100 index

The FTSE 100 index has been underperforming compared to its global peers since 2016 when the referendum on the UK membership was held and resulted in an unexpected Eurosceptics victory. A no-deal Brexit was priced in the UK stocks as a bearish factor. However, the trade deal of the UK and the EU signed at the very last moment has eliminated it.

Dynamics of global stock indexes

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Source: Bloomberg

According to Boris Johnson, the trade deal brought about confidence, which is the most important. The uncertainty, pressing down the UK assets for many years, has eased at last. So, the UK stocks could be booming up in 2021. In 2020, the[ FTSE 100][8] has lost about 13% in value. In 2021, the bulls should at least gain back the lost points.

Boeing stock

[Boeing][9] has faced severe problems so far. The company was already challenged before 2020. There were crashes of two 737 MAX aircrafts, which killed 346 people. As a result, Boeing was banned from using machines of this type in March 2019. Considering that the 737 MAX orders accounted for about 80% of total demand, this was a disaster for the corporation. In 2020, COVID-19 worsened the situation, and Boeing stock crashed to a seven-year low. So,[ Boeing][9] has been -33.5% this year, which suggests the stock is now undervalued.

In late December, the Boeing 737 Max was back in service in the US after the ban on this type of jets had been lifted in November. According to Cirium,[ Boeing][9] plans to make 588 flights on 737 Max in January. The jets are actively utilized in Brazil. Gol Linhas Aereas Inteligentes SA performed 516 flights in December, Grupo Aeromexico SAB - 73. I believe that everything will be fine in the States. I think the Boeing stock should be rising in 2021. Besides, the rapid growth of the world economy and tourism suggests that the[ Boeing][9] stock price should be up to $335.

Price chart of BA in real time mode

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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  1. my.liteforex.com/trading/chart?symbol=EURUSD&returnUrl=true
  2. my.liteforex.com/trading/chart?symbol=USDPLN&returnUrl=true
  3. my.liteforex.com/trading/chart?symbol=USDCZK&returnUrl=true
  4. my.liteforex.com/trading/chart?symbol=USDHUF&returnUrl=true
  5. my.liteforex.com/trading/chart?symbol=XPTUSD&returnUrl=true
  6. my.liteforex.com/trading/chart?symbol=UKBrent_n&returnUrl=true
  7. my.liteforex.com/trading/chart?symbol=USCrude_n&returnUrl=true
  8. my.liteforex.com/trading/chart?symbol=FTSE&returnUrl=true
  9. my.liteforex.com/trading/chart?symbol=%23BA&returnUrl=true