Back in July, we looked at one fund manager’s bold prediction that the S&P/ASX 200 Index (ASX: XJO) will hit 8,000 points by the end of the 2021 calendar year, with the All Ordinaries Index (ASX: XAO) presumably well above that level.
Seeing as it’s towards the back end of October now, and the ASX 200 is presently at 7,441 points at the time of writing, the window for this prediction to come true is narrowing. Especially if you consider that global investment manager Research Affiliates was basing this prediction on rising commodity prices at the time. I’m sure the good investors over at Research Affiliates weren’t to know that the iron ore price was about to have the floor pulled out from under it.
But what of the All Ords? Sure, it may not be as followed as its younger sibling the ASX 200, these days. But it’s sure sitting a lot closer to 8,000 points than the ASX 200 is right now at the present 7,754 points.
Can the All Ords hit 8,000 points by the end of the year?
So what would it take for the All Ords to hit 8,000? Well, it already got mighty close. Back in mid-August, the All Ords hit what is now its all-time high of 7,902.2 points. On that day, the ASX 200 also hit its current high watermark of 7,632.8 points.
We would only need the All Ords to put on around 1.8% from today’s levels to hit that number, and another 1.25% roughly to hit 8,000 points.
All we would really need is the big four banks, or perhaps BHP Group Ltd (ASX: BHP) or CSL Limited (ASX: CSL), to have another terrific month, and we’d probably be there. That’s because, just like the ASX 200, the All Ords’ share weightings are dominated by these companies, the largest by market capitalisation on the ASX boards.
So how likely is this scenario? Well, no one seems to be too keen to make the call, at least recently. A few months ago, a survey conducted by the Australian Financial Review (AFR) found that “the majority of equity strategists surveyed… forecast the benchmark [ASX 200] will only add a little more than 2 per cent by Christmas”. That’s going from the 7,300 point mark at the time, implying an ASX 200 at 7,500 points at the end of the year.
We can extend this prediction to a rough level of 7,800 points for the All Ords. Those providing this prediction include brokers JPMorgan, Credit Suisse and UBS.
But that was then, and commentators have been comparatively silent in the months since. As per usual, we will probably have to wait until 31 December to actually have any idea of where the All Ords will end up at the end of 2021. As they say, the waiting is the hardest part!