Market appetite for riskier investments like stocks has grown in 2023. The FTSE 100 has soared to record highs above 7,900 points, for instance. More strength could be around the corner too as investor confidence improves.
Sam North, market analyst at investment platform eToro, notes that “2022 was a painful year for investors with very few places to hide”. But he adds that “from what we’ve seen so far in January, 2023 could be very different, with a number of asset classes and sectors starting to shine”.
Here are the four top investment opportunities North has identified for stock pickers this year:
#1: Technology stocks
Investor demand for technology stocks is tipped to bounce back as risk appetite improves.
North notes that “rising inflation and combative monetary policy from the US Federal Reserve and other central banks” damaged the sector in 2022. But he says that the narrative has shifted on this now “as inflation, and therefore interest rate expectations, soften”.
He points to the strong rebound in Netflix’s share price during the past nine months of evidence of this. And he suggests that the cheapness of shares like Microsoft provides “a strong opportunity for investors to re-engage with”.
#2: Chinese stocks
North says that investing in stocks in China could be a good idea following major policy changes there.
He notes that loosened Covid-19 lockdown rules “will reinvigorate Chinese consumer demand and support markets”. And he suggests that reduced political interference in major firms might provide “more pro-market sentiment for investors and could boost stocks such as Tencent and Alibaba”.
A recovering real estate sector is also tipped as a potential driver in the region. Though, North adds that inflationary pressures could weigh on investment performance.
#3: Copper stocks
Investor interest in copper and in producers of the red metal could also rise as Chinese consumption improves, the eToro analyst notes.
He adds that “China reopening and gearing back up its industrial production will help the copper price push higher this year, and could provide picks and shovels opportunities to own major copper miners such as BHP, Freeport-McMoRan, or Rio Tinto”.
He notes too that copper stocks held in London Metal Exchange warehouses are low. This could provide metal prices with an added boost.
#4: Oil stocks
Oil prices have retraced sharply from above $120 per barrel in the summer to around $82 presently. But North says that those loosened Covid-19 rules in major consumer China could pull the commodity higher again.
Fossil fuel giants like BP and Shell posted record profits in 2022. And North says that returning Chinese demand, combined with fresh production cuts from the OPEC+ group of countries, means that ”those firms could be toasting the prices and sharing profits with investors again soon”.
Here’s what I’m doing now
I plan to increase the size of my own stocks portfolio in 2023. Like North, I believe demand for risk-on investments like UK shares could rise strongly this year.
But even the most experienced investors get it wrong when it comes to guessing near-term stock market movements. And especially in volatile economic and political periods like today.
This is why I buy shares with a long-term view in mind. Indeed, I’ll invest in companies I think will deliver robust returns long after 2023.
