2016 – A year of opportunity

With 2015 a notably volatile year and many a stock now trading at heavily discounted levels, we’re approaching what could be a turning point. As an investor, you’ll know just how much has been happening this year, and how much uncertainty has stalked the markets with the resultant volatility proving difficult for many to navigate. At the same time though, it’s provided the ideal trading conditions for those who have been eyeing market moving events for their short-term effects – these having been particularly prevalent in 2015. Short, sharp market moves.

The news has been the news – there’s little point in over analyzing it here, because you as an investor want to know what to look for in the coming 12-months. Let’s merely summarise, then, the prime drivers that have moved markets in 2015:

• Greece
• US interest rates
• Chinese economic slowdown (or is it?)
• Commodities
• Unrest in the Middle-East

Looking forward to 2016, the question becomes: which of the above is set to continue influencing the markets? Greece is still not settled, but is easily eclipsed by the Eurozone vs. US monetary policy issue. A December move on interest rates by the Federal Reserve seems likely. Markets have all but priced it in. With higher interest rates, financials stand to benefit.

The Chinese stock market is frequently mistaken for the Chinese economy. Importantly, they’re not the same thing! Growth there is probably somewhere between 4% and 6% – we can’t be sure since we can’t be sure that the Chinese numbers aren’t cooked. It may even be 7%. Since China (meaning essentially the commodities market) is still looking rocky, we’ll speculatively consider some emerging-market-sensitive mining stocks that have some of the best recovery potential in the markets. Commodities are interesting – the market is readjusting. There will be a time to get back into commodities, the question is merely: when?

Tensions in the Middle East look set to grow. The wind is already in the sails of defence stocks and with that region producing the majority of the world’s crude oil, we’ve got a challenge to the reverse gear that is global oversupply.  Liquefied natural gas (LNG) also looks set to play a greater role in UK energy production.

Volatility can be traded successfully and CFDs give you the investor all the benefits of traditional shares, including the receipt of dividends when holding long positions in equities and indices, while enabling you to speculate in the short term using some of the capital that would otherwise be tied up in shares. To read more on this, see our honest educational piece on CFDs.

In any case, the important thing right now is that not only do we have a couple of potentially exciting drivers moving forward, we’ve also got some very reasonably priced stocks. That’s what makes 2016 a real year of opportunity.

Read on for a non-exhaustive selection of stocks to watch in 2016!