Predictions For 2024

Last year's predictions were spot on, let's see how well I do this year...

Jan 07, 2024

This article contains a review of last year’s predictions and my predictions for the coming year. I’ll start with the review of the predictions I made at the start of 2023.

Last Year’s Predictions

Last year I made the following predictions (on another website which I no longer update):

The property market will continue to decline. This was correct, the average house price fell by 2%1
The OCR will increase to at least 5.5% by the end of the year. This will lead to fixed mortgage rates in excess of 7.5%. Again, this was correct, the latest OCR data reports the OCR to be 5.5%2 and mortgages are between 7% - 8%, depending on the term you choose
Inflation will remain high, but headline inflation will be reported slightly lower. This was also correct, headline inflation was 7.3 and dropped to 5.63 at the time of writing (though my guess was 6.2%, which I think was pretty close)
I predicted that the result of the election would be a National + ACT government. This was correct, but also includes the Winston First party.
I predicted a bit of a recessionary environment, improving in 2024. Technically a recession is two consecutive quarters of negative change in GDP and while the latest data says the September quarter was -0.3%4, we don’t have the December quarter’s data to confirm whether my recessionary environment prediction was correct from a technical point of view. However, I feel that the general gist of my prediction was neither right nor wrong. I say this because I wasn’t predicting a technical recession, rather a recessionary environment, which we sort of experienced with -0.3% GDP growth and drop in the stock market. However, I don’t feel that the stock market was depressed for as long as I thought it was going to be or that people had cut back in spending as much as I thought they would. There’s definitely a strong argument to say that this too, was correct, but I don’t feel comfortable taking the win on this one, though (if you’ve been following my writing, you’ll know that) I did dip back into the share market before the Santa Rally took off.

Upon reflection on the above graph’s dip and increase towards 2024, and given the negative quarter of GDP growth, I think I’ll award myself a win on that one as well.

I also predicted that the war in the Ukraine would continue. Unfortunately that was correct, though no special prizes there, as I think that was everyone’s prediction.
Finally I predicted that I’d get a terrible disease. Unfortunately this was also correct. I now know what it feels like to suffer from shingles. It wasn’t great. I give it 2/10 stars. Not recommended.

In summary, my macroscopic predictions for the year were good and I dare say pretty much spot on. Followers of my writing will know that my predictions for stocks also were reasonably accurate, though (other than identifying a few bargains that happened to go up in the Santa Rally and following positive announcements) I don’t claim to have any special powers of prescience there.

2024 Predictions

Last year was easy to predict for me. It was clear where everything was going. This year feels more difficult. I had hoped that this year would be one of recovery, but given the situation in the Suez Canal, I can’t help feel that we’re looking at a bad start for the year, making the remainder of the year a little random. Nevertheless, I’ll try my best. It’s late and I’m tired, so excuse the waffle as I try to work things out as I write. I’ve highlighted my predictions below, for clarity:

Given that transport ships are having to find alternative routes than via the Suez Canal, shipping costs between Asia and Europe will increase 3 fold. This will hamper Europe’s attempts to reign in inflation. The rate of Inflation will increase in Europe. Assuming that demand isn’t too elastic (though quantities bought must reduce from this price increase), the fact that the same number of ships will take longer to deliver the same amount of goods will mean that there will effectively be reduced shipping capacity, affecting even those that don’t use the Suez Canal. This lack of supply will push up shipping prices for all countries. NZ will see an increase in inflation as a result of this. If I have to put a number on it, I’ll say that we’ll have a peak of 5.9%. I don’t see it going much higher because we’re already part way though a downwards reaction as the increase in mortgage rates is still working it’s way through society and the timing of the stats will play heavily on this, especially due to the lag and transitory nature of this particular cause of inflation.

I don’t know how long this will last, but my guess is that transport issues in the Suez Canal will last many months. If it goes on too long, this will hurt China’s economy further and (at least behind closed doors) they will be more sympathetic to geopolitical and military interference from Europe and more specifically, America. This will enable America and Europe to interfere.
Given that China’s economy hasn’t been as performant and with the prospect of things worsening from the former point, the lack of employment of young Chinese men (alongside the Chinese public’s newly discovered capacity to rebel, as we saw under COVID restrictions) could cause concern for the Chinese governing dictatorship. I predict that since the CCP won’t be able to fix these issues, distraction techniques will be employed in the form of frenzying up warmongering, most likely over Taiwan. Hopefully this won’t amount to anything because America shouldn’t take too long to regain safe passage through the Suez Canal, however, America’s interference in the Middle East will likely be used as justification (although, illogical) for China’s increasing tension towards it’s neighbours. With Russia and North Korea added to the mix, the world will feel like a less safe place. America will continue to step up it’s nationalization of it’s microchip production to de-risk itself from Taiwan. Once this happens, China will feel free to invade Taiwan - but I don’t think that China will invade Taiwan this year. This year, like others, will be the continued brainwashing and frenzying of public opinion in preparation for a future invasion.
As a result of increased inflation (from my first point), NZ will have risk of a small OCR increase, though my guess is that this will be delayed as long as possible and the OCR will most likely not change. Though given the high OCR and inflation, this will create pressure on the economy, which will cause downward pressure for the OCR in the last quarter of the year - though by then the stats won’t be around long enough to drop the OCR given that it’ll take a few quarters to resolve things in the Middle East plus a quarter to wait for the new stats to come in and things to filter through. I can’t see the OCR moving more than 0.5% in either direction, at most.
I don’t feel overly positive about the share market / economy with the start we’ve got to the year, but I feel that the latter half of the year or even the last 3 quarters could be anyone’s game. I will say that I expect the stock market to have a slight dip in the first half while inflation risk becomes apparent. More clarity will be seen as statements are released from the RBNZ. I expect that there will be a Santa Rally at the end of the year.
Given all the geopolitical and economic stuff, the USD will remain strong against the NZD. I can’t see 1 USD being worth less than 1.50 NZD and expect it to stay generally above 1.60 NZD per USD, at least for the first half of the year.
I expect the property market to remain somewhat flat for the first half the year with a slight upturn towards the end of the year.

In terms of how this will affect my listed shareholdings, I foresee the following:

NZX:EBO increasing slightly to maybe $38 - $39 a share by EOY
NZX:MFT increasing as they seemed to benefit from increased freight prices in the past, though in truth (and I’m disappointed in myself to be able to say this), I don’t fully understand the relationships within the industry and how it affects the company
NZX:SCL remaining above $3 a share, but not by much. They’ll have their forecasted profits and demand reduced by the increased freight costs and lack of ships available. They’ll return to lower mid $3’s in the EOY Santa Rally
NZX:SUM bouncing around but averaging out to be generally flat and then slightly increasing at the end of year Santa Rally
NZX:THL not performing that well
ASX:DSK not performing that well
ASX:KPG decreasing slightly / flat
ASX:SPZ decreasing slightly / flat

Personally, and on a more positive note, I hope that this is the year I’ll be able to retire, though I think I’ll be scraping through until I can get onto the start of a bull run. If my plans come to fruition, you’ll see a lot more articles on stock analysis, possibly some financial planning stuff and a lot higher quality work (since I’ll have more skin in the game, which will require more of my attention - my listed stock portfolio is currently only 5 figures as most of my position is cash and non listed assets [business and property]).

I would LOVE to hear your own predictions and reasoning in the comments. Seriously, please leave me a comment with your predictions because it’ll help me balance, justify and revise my thinking; along with helping everyone else, too.

The NZ Investor

Discussion about this post