Rudi's View | 10:00 AM
In Weekly Insights this week:
- Wilsons' Pragmatic Outlook For 2026
- Australia, The Non-AI Refuge
- Post Sell-Off Opportunities
- AI Remains The Theme In 2026
- A Lame Duck USD
- Diversification Is King
- Bull Market To Broaden In 2026
- Are Cyclicals Next Year's Champions?
- Active Versus Passive
- FNArena Talks
By Rudi Filapek-Vandyck, Editor
Focus On 2026
As is custom for this time of the year, investment strategists are reviewing and refreshing their outlook and preferences for the calendar year ahead.
As 2026 approaches, key central themes include the AI megatrend and US exceptionalism, as well as USD weakness, central bank policies, a broadening of share markets' momentum and the position of the ASX inside a global asset allocation framework.
Below are some of the more interesting views and conclusions put forward (I hope).
Wilsons' Pragmatic Outlook For 2026
One of the more pragmatic views that entered the FNArena inbox this week was an updated Australian share market strategy report by Wilsons Advisory.
In it, the strategists simply conclude a 'correction' had become overdue as investor anxiety over elevated valuations collided with the RBA no longer cutting its cash rate.
Short-term, the problem of elevated valuations hasn't gone away, certainly not at the top end of US equities, but earnings growth is making a come-back locally, albeit very much dominated by resources, and the global economic outlook for next year (2026) continues to be positive.
Not to be dismissed also is that while the RBA is now officially on 'pause', other central banks, including the Federal Reserve, are still stimulating.
Wilsons' inference is equities' bull market remains poised to continue throughout 2026 and positive vibes globally will equally reflect well on the local market.
Wilsons' mildly positive view also assumes the RBA is nowhere near to start hiking rates again. Over time, two more rate cuts are still considered more likely.
The strategists' pragmatism shines through in the observation that, irrespective of notable weakness in November, Australian equities can still finish the year with a total return that once upon a time was considered 'normal'.
At Friday's close, the ASX200 including dividends had returned 6.38% year-to-date. A positive rally into the new calendar year has indeed the potential to pull this year's total return to the 15-year average of circa 8%.
One fact best not ignored is the strategists' overall Neutral stance on Aussie equities (inside global asset allocation context) is equally based on inhouse projections of a stronger AUD.
Without it, a more negative view would have been in place; i.e. the Australian market remains poised to underperform against global peers, but the stronger currency should reduce the relative under-performance for local investors.
Australia, The Non-AI Refuge
A better global environment is also at the centre of UBS strategists' projections for the year ahead, as are elevated valuations --expected to remain above historical averages for the time being-- and the continuation of the US-led AI and AI-infrastructure story.
Combining it all for the year ahead, UBS's fresh target of 8900 for the ASX200 by end-2026 implies a similar or slightly better performance, depending on what happens over the final weeks of calendar year 2025.
UBS is in particular positive about the earnings growth outlook for corporate Australia, expecting a year of 10%-plus growth lays ahead, carried by a strong rebound for the mining sector.
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